The COT and the Corn Trade: Revisited

In my March 26 newsletter contribution I talked about the idea that corn futures could rally on Non Commercial Spec position short covering and for nearly two weeks that action was beginning to develop. The Commitment of Traders report (COT) on March 17th showed that non-commercial traders were short 312000 corn contracts and may corn closed $3.71 that day. The next week they had shaved their position to 282000 contracts and may corn closed $3.93.

March 31 brought USDA’s quarterly stocks and prospective plantings report. On that day the non-com short position had shrunk to 257000 contracts and may corn traded $3.98 before the report was released at noon. The report was deemed to be bearish, non-com specs sold the market and it closed at $3.76 which is about where we are trading as I write this.

This chart shows the relationship between the non-commercial (speculative) short position and nearby May Corn futures, a kind of “follow-the-money” view if you will. Producers holding old crop corn should understand that this money flow wants to trade against your long position in the corn market. And it will win in the long run. Fundamentals in the corn market are just too weak to think otherwise.

While we may have another chance to sell corn at better than current values based on the possibility of planting delays. The money knows that the crop always gets planted and will be looking to add to short positions going into May. Look for a weaker trend in corn in the coming weeks.

#corn #futures