Weekly Analysis: Corn

Market Type: 3 (Less Bearish)

Trends
- Secondary (intermediate-term): Down (3-wave pattern)
  - Bearish 2-week reversal on weekly charts the weeks of May 3 and May 10.
  - New 4-week lows the week of May 24
  - Wave B (second wave) of topped week of June 7
  - Wave C (third wave) has a target of $5.00
  - Noncommercial traders continue to liquidate their net-long futures position
    - Another 1,450 contracts for the week ending Tuesday, July 20
- Major (long-term): Down
  - Bearish spike reversal on monthly charts are end of May
Fundamentals
- Bullish
  - Dec21-to-July22 forward curve closed at a carry of 12.25 cents
    - Covering roughly 19% calculated full commercial carry
Seasonality
- Bearish
  - Dec Corn 5-year tends to top first weekly close of June
    - Drops 14% through the last weekly close of August
  - Dec Corn 10-year tends to top first weekly close of June
    - Drops 11% through the last week of September
  - Dec21 posted a high weekly close of $6.3650 the first week of May
Price Distribution
- Dec21 closed last Friday at $5.43
  - Putting it in the upper 22% based on weekly closes back through the 2008 contract
- Dec22 closed last Friday at $4.9125
  - Putting it in the upper 27%
Implied Volatility
- Moderate-to-High
  - Dec Corn ~ 32%
  - High volatility tends to reflect increased noncommercial activity
  - High volatility genially means option premiums are overvalued
Theoretical Positions
- Producers
  - 2020-2021
    - All remaining cash could’ve been sold at the end of May
      - Based on major bearish spike reversal by the cmdty National Corn Price Index (NCPI, weighted national average cash price
  - 2021-2022
    - It’s possible 25% to 50% of expected production was priced at the completion of the 2-week reversal the week of May 10.
      - If so, the price would be roughly $5.40 (close the week of May 10)
    - It’s also possible 25% to 50% of expected production has been priced as Dec21 corn moved higher in its price distribution range
      - If so, an average of roughly $5.60 could be in place
    - The downside target for Wave C is at least $5.00
  - 2022-2023
    - It’s possible 25% to 50% of expected production was priced at the completion of the 2-week reversal the week of May 10.
      - If so, the price would be roughly $4.73 (close the week of May 10)
    - It’s also possible 25% to 50% of expected production has been priced as Dec21 corn moved higher in its price distribution range
      - If so, an average of roughly $4.90 could be in place
- End Users
  - 2021-2022
    - Continue to cover needs hand to mouth given the secondary and major downtrends by the NCPI