What Are Corn Speculators Thinking ahead of WASDE Report?



Price channel

CBOT (Chicago Board of Trade) December delivery of corn futures contracts remained range-bound and fell on October 7, 2015, after a two-day price rally. Correction in corn futures prices resulted from profit booking by traders who decided not to wait until after the World Agriculture Demand and Supply Estimation (or WASDE) report to release on October 9, 2015. However, the previous day’s open interest on CBOT rose by 0.51% on October 7, 2015. The producers have kept corn stocks in bins because of expectations of price increases after the WASDE report release.

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Support and resistance

Corn prices might progress with support and resistance levels at 380 and 410 cents, respectively. The US Department of Agriculture’s reports have a certain surprise factor, which can bring significant changes to the price patterns. The traders and speculators continued to adjust their positions on the day due to selling pressure from corn futures.

Corn futures below the five-day and ten-day average volumes suggest that speculative trades could increase. The volatility in the corn futures was between the five-day average and the ten-day average, showing the sensitive behavior of the market regarding the event risk. At the same time, closing prices for corn futures ten days ago indicate prices have been on the rising trend. Speculators might be waiting for last-minute expectations from analysts. If expectations remain positive, there is a chance that large speculative traders might decide to act on positive market sentiment.

Performance of related stocks

The share prices of food companies Tyson Foods (TSN), CHS (CHSCP), Bunge (BG), and Archer Daniels Midland (ADM) rose by 1.5%, 0.07%, 1%, and 1.1%, respectively, on October 7. However, the price of the PowerShares DB Agriculture ETF (DBA), which has exposure to these stocks, fell slightly by 0.14% on October 7.


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