Corn: Long Trade Ahead of the USDA Report

Against Market Expectations

Moderate losses in Corn, triggered by ‘perfect’ weather conditions and increased amount of acres for corn plantations may have provided us with a long entry despite the upcoming the United States Department of Agriculture (USDA) report, due today at 11:00am CDT (16:00 GMT).

Corn Technical Analysis

Following the Crop Progress report there are growing expectations the USDA supply and demand report will show an increase in Corn production, which will trigger another leg lower in Corn price. The technical analysis on Corn however is more bullish than one would expect. The weekly chart inverted hammer, along with oversold indicators actually suggests moderate gains are due to be seen.

Corn Weekly Chart

Please click on the chart to enlarge:

Corn Trade Alert 12/08/14

Corn Weekly Analysis 12/08/14

We believe trades may seize the opportunity to realize profits when the USDA report is released. It may be interpreted by a gap lower, which will be immediately filled with long orders. The other alternative is a major surprise from the USDA report, which will in turn create a mass rally in Corn prices.

We have decided to establish the long trade at market price and place our faith in the weekly chart. We do not see the need to place entry orders as a weekly entry has already been confirmed. This is one of the scenarios where the technical and fundamental outlooks do not match. As this is a weekly chart, which tends to be more reliable than intraday analysis we are executing the long trade and wait for 16:00 GMT. The trade will be updated at the bottom of this page when relevant.

Corn Trade Details

Long @ market price
Take profit: 416
Protective stop: 338
Estimated duration: 7 days
Risk Ratio (RR): 1 : 3.8 (approx.)

12/08/14 UPDATE: Corn is trading at 356.50 at the time of this writing. We are closing 20% of the long trade at market price.

13/08/14 UPDATE: Corn is trading at 359.0 0 at the time of this writing. We are closing 15% of the long trade at market price and shift our protective stop to the entry.

15/08/14 UPDATE: Price missed our protective stop at the entry and currently trading at 365.50 at the time of this writing. We are closing 40% of the long trade at market price and shift our protective stop to 358.

Corn price

Click on the chart to enlarge:

Corn Technical Analysis 15/08/14

Corn weekly chart 15/08/14

26/08/14 UPDATE: With a slight delay, our protective stop order was triggered (above the entry). We have ended the trade with a modest profit due to partials realization and stop loss modifications.

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