Monthly Analysis: Corn

2023-10-01T10:54:05-05:00October 1st, 2023|Monthly|

Corn Cash Index: The monthly close-only chart of the cash index I track for basis and monthly available stocks-to-use provides the clearest picture of a major (long-term) trend for the corn market in general. The index continues to follow a similar path to what was laid out between the 2010-2011 to 2013-2014 marketing years, with the R-squared correlation increasing to 69.5% at the end of September 2023. 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 suggestion was to buy put options as protection, establishing a synthetic call. Otherwise, continue to buy cash corn as needed only.

December Corn: Dec23 did not complete a bullish spike reversal during September, coming up just short of the August settlement of $4.7825. For now, I will not be applying the Horseshoe Proximity that would tell us the September close of $4.7675 is close enough. Key support is at the September low of $4.6775 heading into October.

Theoretical Positions:

  • Traders: Investors have likely been chopped up the last few months. Based on my analysis there are no positions at the end of September.
  • Hedgers: Continue to hold December short hedges with the idea of rolling out to deferred on stronger carry.
    • Due to basis risk  and the downtrend in the cash index, newly harvested bushels should be sold at harvest.
    • The spring guaranteed price was $5.91
      • with the fall price calculated during October, the average daily close of the Dec23 futures contract.

Previous 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

Teucrium Corn Fund (CORN) completed a bullish spike reversal on its monthly chart during July. While CORN sold off during August,  it held the July low of $21.74. As September played out, CORN equaled its July low, putting in place a possible double bottom pattern. The key will be holding the low of $21.74 during October given the September close of $22.02. Theoretical Positions: New longs might’ve been established near the July settlement of $23.09 with sell stops below the July low of $21.74.

Go to Top