Cash Corn: National Corn Price Index (NCPI)
Weekly Close: $5.2924, down 2.02 cents
Secondary Trend: Down
Basis: Neutral-Bullish. Calculated at 16.25 cents under March futures
Analysis: The most recent technical pattern posted by the NCPI is a bearish key reversal from the week of February 8. Since then, though the index has consolidated with that week’s range of $5.5196 to $5.1064. Base on the reversal, though, the expectation is for a bearish breakout over the coming weeks.
Theoretical Position: Producers: The bulk of 2020 production could be sold at this time. End-users: 2020-2021 cash needs were covered near the weekly close of $3.00 (week of August 10), a price that puts the NCPI in the lower 7% of its price distribution range (weekly close only). Those needing additional cash coverage can wait for a potential selloff based on the market being overbought and showing signs of a potential downtrend.
Old-Crop Corn Futures: May 2021
Weekly Close: $5.4550, down 2 cents
Secondary Trend: Down
Noncommercial Position (as of Tuesday, March 2): 503,765 contracts net-long, down 26,069 contracts
May-July Futures Spread: 11.5 cents inverse, Bullish
Analysis: Similar to the NCPI, May futures posted a bearish key reversal on its weekly chart the week of February 8. The contract has been consolidating within that weeks’ range of $5.72 to $5.2325 since then, with noncommercial selling offset by continued bullish old-crop fundamentals. However, if the May-July spread sees renewed pressure this week the May futures contract could work back toward support.
Theoretical Position: It’s possible some short positions were established near the close the week of February 8 at $5.3650. If so, buy stops could be placed above the contract high of $5.72.
New-Crop Corn Futures: December 2021
Weekly Close: $4.8150, Up 10.75 cents
Secondary Trend: Up
Noncommercial Position (as of Tuesday, March 2): 503,765 contracts net-long, down 26,069 contracts
Dec21-March22 Futures Spread: 7.5 cents carry, 28% calculated full commercial carry, Bullish
Analysis: The Dec 2021 issue regained its bullish momentum, posting a new contract high of $4.8225 last week (before posting a new contract high of $4.8575 overnight through early Monday morning). The contract is in position to establish a potential top if we see increased commercial selling over the course of the week. Key support for the Dec-March futures spread is at its recent low of 7.75 cents carry.
Theoretical Position: Producers: It’s possible all previous futures hedges and short call options have been lifted following the recent extension of the secondary uptrend. While the contract could establish a topping pattern, we will wait for a clear turn signal. That having been said, the contract is at a strong price so locking in a small amount of 2021 production makes sense. It’s usually better to make sales in an uptrend rather than a downtrend.
