Disclaimer: there is risk of loss trading futures and options. Past performance does not necessarily indicate future results. This is our opinion and should be treated as such.

Why the alert?

We feel like corn is at a good spot to consider some re-ownership strategies for those who are oversold or made sales near our Sep 2nd sell alert. We also think this is a good time for getting coverage for end users.

Before we get into some strategies you could consider, let’s look at the charts and reason behind the alert.

Dec Corn:

We broke that big support level and prior range. As a result, we sliced right through that massive volume gap to the downside.

We’ve now given back 50% to 61.8% of the entire rally from August.

Now re-testing those highs from May. Trying to turn them into our new floor.

At the same time, since we ran through the volume gap we are back at an area of high volume.

So this would be an area where a bottom would make sense. However, we ideally do not want to break below the 61.8% level and $4.90.

If we look at the indicators.

Corn is finally oversold.

The RSI is the most oversold it has been since corn was trading at $4.25.

The stochastics have now also bottomed out. Something we want to see when searching for a major bottom. This doesn’t mean we “have” to bottom here. But often times we won’t bottom until they are bottomed first.

If you zoom out to the weekly chart.

This also appears like a high time frame re-test for now.

We were trapped in a massive sideways range for 3 years.

We broke out. Busting those 2025 highs and 2021 lows.

We are now re-testing that point of breakout. Trying to turn the old resistance into new support.

What strategies could you consider?

There are several ways you could go about it.

For end users, we like extending coverage. What route you take depends on your situation. For a specific recommendation call or text us at (806)484-1214

For producers who are oversold or made sales higher than we are today, if you would like some upside exposure, here are some routes we like considering:

1) For shorter term re-ownership we like buying near the money calls.

2) Bull spreading futures is another possible strategy to consider. An example would be buying March-27 futures and selling Dec-27 futures.

3) For longer term re-ownership, we like selling puts to buy a call spread using the March or July.

An example of this would be:

Sell $4.90 March Put
Buy $5.30 March Call
Sell $6.00 March Call

At expiration, this specific trade would give you a max upside of $6.00 or 70 cents of upside. If we dropped below $4.90, which is 24 cents below the market, you would re-own via futures. With a breakeven of $4.90 to $5.30.

(I attached a visual of this one below)

For more information on any of these possible strategies, of if you’d like to discuss what strategies may be best for you, give us a call or a text. As not all of these strategies are for everyone.

Office: (806)484-1214