I am Stephen Davis, senior market strategist at Walsh Trading, Inc., Chicago, Illinois. You can reach me at 312-878-2391.

December corn futures prices stopped just below the moving average resistance yesterday after an eight-session rally. Lower than expected corn yields reported during the recent Pro Farmer Crop Tour have helped corn prices go higher along with buyers covering their short positions. The Pro Farmer Crop Tour’s primary goal is to provide the industry with accurate growing season information about likely corn and soybean yields at the state and regional levels during the upcoming harvest season.

On Monday, open interest declined by more than 29,000 contracts. This follows a 36,000 contract drop in open interest on Friday. Notice on the chart below that this corn market does not stay much above the 50-period moving average. 

Sell this market. A trade strategy is to sell December corn futures at the market price, which was $409 ½ at today's (August 26) close. Use a 10-cent buy stop ($500) and look for the corn market to sell off leading into the Labor Day holiday weekend. 

Also, look for this market to retest the $4 level. 

In my opinion, U.S. corn exports are likely to remain strong and support the market on selloffs. The top destinations for U.S. corn last week were Mexico, Japan and Saudi Arabia. These three countries are major U.S. corn buyers. Prices need to extend the rally beyond yesterday's high to maintain upside momentum. That's why a 10-cent stop loss is perfect for this strategy, in my opinion. 

We will write about this in the weeks ahead. For now, get short on December corn and have your stop-loss above the 50-period moving average. 

To discuss trading strategies, contact me at 312-878-2391.

Stephen Davis
Senior Market Strategist 
Walsh Trading

Direct 312 878 2391 
Toll Free 800 556 9411
sdavis@walshtrading.com
www.walshtrading.com

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