March Corn is up 1 ¼ cents at $3.94 ¼ this morning as I write.  The included chart shows that yesterday, March Corn was able to bounce off the area near where the futures funds were strong buyers a month ago.  This support area below in the $3.70 to $3.80 area is critical to hold, otherwise, I would expect the funds to begin liquidating their entire long position which could send corn prices down towards the contract lows.  It is hard to imagine that happening considering that there is supposed to be a quality problem with the a lot of the late harvested crop.  I haven’t read about any real proof of that yet, but that is the talk.  The directional movement indicators are slightly bearish but the ADX line continues to fall showing a lack of trend strength.  I will wait to see if corn prices can challenge the upper end of the trading range once again, and to see if there will be strong farmer selling or not.

 Followers of this letter should be long one March Corn ($4.30 strike) call option from 17 ¼ cents and short 2 March Corn ($4.90 strike) call options at 7 3/8 cents each.  (As a result of the profit made on the short $3.20 puts, our cost basis of this ratio spread is now a 1 cent credit!) There are 70 days left until March options expire.

With all the price tests above $4.00 recently,  I would hope that the producers have already liquidated most if not all of their corn that needs to be sold.

 David Hall

 The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.

 This newsletter is not intended for dissemination to the public without prior approval from David Hall.