Corn Market

2022년 2월 11일

**Please do not take this as a projection or extreme bullish stance. This Market is sensitive to major up and down moves that will eventually leave many surprised by the high and the low it will leave behind.

The quarterly chart shows extreme highs being made in the past 50 years.
The current Corn market shares some similarities with the 06’-08 and the 71’-73’ Markets.
Supply, Demand, and Inflationary driven Markets. Add emotionally driven as well….

• 71’-73’ Had the Russian Grain robbery and the US$ taken off the gold standard. I don’t know about production back then but the World demand and inflationary fears were very strong
• 06’-08’ Had new demand in US ethanol paired with a strong growing China economy hungry for US grains. The 07/08 housing crisis brought fears of inflation. I am unsure on production in those years.
• 20’-22’ Domestic and world demand is strong. There have been areas of production misses the past couple of years across major exporting nations, and Inflationary fears are elevated. Part of last year’s corn rally ending was due to rationing of corn for feed demand as Corn approached $7.00, Wheat still had a 5 in front of it. This year Wheat has been trading above $8. Major corn rallies of the past were preceded by strong Wheat rallies.

With similar ingredients to previous Major Bull rallies, I feel that potential upside on this market is extreme and unmeasurable. Because we never know for sure, I had Identified the 5.75+ area as a place to target old crop sales, with the 7.35 area the potential upside/resistance. But beyond that I feel that the 9.50 area should be considered for potential extreme upside.
Both of the previously identified markets rallied more than 200% of their 24 month low before cooling off. I do think it is fair to use rate of change as potential upside when dealing with inflationary type markets. Corn has never been to 9.50 before, but (twice in 50 years) it has seen a rate of change of 200%.

For New Crop Corn: I don’t know if there is anything we can do with this other than look more at courage calls, or to be more engaged with puts (with a roll up program). This is a monthly continuous chart that will be driven by old crop contracts. There could be a strong old crop/new crop inverse if this thing was to get excited the first 6 months of this year, but new crop contracts should perform well.

It is dangerous to put out charts showing such extreme levels, but I think it is prudent to shock test Margin callscenarios against such extreme levels.

**Down side support is 4.75-5.15, extreme Risk is 3.80 to 3.00.