A lot of corn is still in the bins from last year, a lot of guys bought new machinery and equipment and never sold any old crop. Remember the u/z spread? That thing was NUTS, nothing is ever for sure but you can bet that a lot of that old crop corn is going to have to be dumped to make room for this record crop, we are lagging pretty hard behind the 5 yr avg and that to me is the saving grace of this market right now. Refusal of farmers to sell and a lagging crop, once everything "aligns" it could be a rough year.
I just started trading corn futures and am more of a technical than fundamental trader. Hence I got in at the recent pop up with a stop below the previous low at $3 with a medium term view. I was thinking $3 would be pretty much good support because if prices do indeed fall below that level, farmers will just cut back on growing corn thereby reducing supply. Read also somewhere about the ethanol angle (which relates to crude) that corn prices needs to be around $3 for ethanol producers to breakeven.
Yah, I was looking at the dec contract yesterday and today - looks weak. I might want to give it a few more days , if it doesn't go up, I will just cut my position.
In grains pay attention to the "fundamental" side, by that I mean harvest, planting et al. A good way to play the grains is vis-a-vis spreads, look into it. Reduced margin, seasonality, and like this smart guy says "zig when everybody elsae is zagging" Good luck, if corn does go below 3 I'm sure that farmers will put more acres into fallow or another grain, but that won't be an issue for a while because of this bumper crop which is going to be harvested soon.
I am not to familiar trading spreads since I am more of a directional trader. And yes, even though I trade on primarily on price, I do look a little at the fundamentals - news on the plantings, weather conditions etc so as not to get a nasty price shock. Thanks for the advice.
I was not watching the spreads last year. Any lessons learned from last year's corn spreads that can be applied to the current soybean spreads - besides buy the carry and close your eyes?