Markets are lower to start the day with corn down 4 and soybeans down 10.
Looking at the positions, the funds are incredibly long corn. The long position of 400,000 is back towards a record. Price risk is very high in corn, similar to when beans were loaded up 300,000 long a few weeks ago. The corn market is at risk of a 20 cent lower day at any time. The volatility has been increasing since the January 12th report, so the down days are going to be more extreme as well. There has been an awful lot of 6 dollar corn price talk in the community, from traders I know who rarely even trade corn. We are likely getting to the point where the corn market is going to reset the range with another correction. How much more can the funds buy and where does it drop to when they take profits?
News is pretty limited, and that probably has a lot to do with overnight trade. New crop corn has been unmoved and has mostly settled into prices close to 4.40 for many days. Big acres on the horizon for both corn and beans will keep next fall’s futures more subdued. Traders are really bullish corn, but I view it as dangerous. Getting caught up in the bullish euphoria and buying in on the 400,000 long position in corn looks like a bad idea for traders right here, until there is a substantial clean out of position.
Have a Safe Day!