Monthly Analysis: Corn

2023-07-01T14:15:35-05:00July 1st, 2023|Monthly|

Changing it up a bit: The mostly close-only chart of the cash index I track for basis and monthly available stocks-to-use continues to follow a similar path to what was laid out between the 2010-2011 to 2013-2014 marketing years. This 4-year timeframe has seen the index running ahead of 10-years ago, with the high monthly close occurring at the end of April 2022 ($8.00) versus July 2012 ($7.97). A decade ago the cash index posted a low monthly close of $3.37 at the end of July 2014, 24 months after hits high. If the timeframe remains the same, the cash index would post its next low at the end of April 2024. Theoretical Positions: If cash needs were bought at the end of May, the previous suggest was to buy put options as protection, establishing a synthetic call. Otherwise, continue to buy cash corn as needed only.

December Corn: June was a complicated month for Dec23 corn. After coming up just short of completing a bullish spike reversal during June, the contract took out its previous 4-month high of $5.9875 on its way to a mark of $6.2975. The second half of the month then saw the contract collapse to a low of $4.93 and close at $4.9475, within sight of the May mark of $4.9075. It’s possible options were traded during the month, with profits taken on short-dated new-crop July $5.60 calls and possibly going short far out of the money calls. This was due to the continued high implied volatility of the Dec23 contract.

Theoretical Positions:

  • Short Dec23 from roughly $6.1425 (November 15).
  • Previously short Dec22 from the May close of $7.1150
    • Bought back on November 15 at $6.6675 for a gain of 44.75 cents
    • Raising the short Dec23 position to roughly $6.59
  • Previously Sold Dec22 $5.90 put options for approx. 56.0 cents (July 13)
    • Stopped out at approx. 6.0 cents (September 23) for a gain of roughly 50.0 cents

It was a complicated month for the Teucrium Corn Fund (CORN). First, the fund raced to a new 4-month high beyond $26.87, possibly triggering buy stops. However, late in the month the fund collapsed, following the lead of futures and cash, before closing lower for the month at $22.19. Recall the fund did not complete a bullish reversal pattern at the end of May, meaning the major trend was still down heading into June. Theoretical Positions: If new longs are established near the May close of $23.10, based on the Horseshoe Proximity, or during June when the fund hit a new 4-month high then sell stops would be placed below the May low of $21.90.

Go to Top