Farm Progress is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Serving: United States
bullish vs bearish LongQuattro/Getty Images

Are we setting up for a short covering?

Corn bulls were happy to see slightly stronger weekly export sales, but still nothing overly exciting or worrisome enough to shake the bears.

Weather forecasts are mostly mixed. Bulls argue there's still way too much moisture in the soil and rain in the forecast for many important U.S. production areas. Bulls are also pointing to the game-clock, which has been ticking away. Next Wednesday is May 1st, perhaps the bears will start to take more notice once we flip the calendar.

It will be interesting to see how much we have planted by mid-May. Remember, back in 2013 we only had about 5% of the crop planted in the week ending April 28. And only 28% of the corn crop planted by the week ending May 12. That was about 37% behind our historical pace for that week. I suspect we will be ahead of that pace this year. Stay tuned! 

Technical gurus are arguing that the market is now a bit over-sold and may have to trade sideways-to-higher before resuming an additional bearish tilt. As a spec, I desperately want to be a longer-term bull, but I'm going to remain patient. I'm worried that a small move higher, while the bears are catching their breath, could entice smaller spec buying. The funds might use that rally or strength as an opportunity to add more length to their record short position. I don't see the funds shaking out of their short position easily or anytime real soon. Be careful falling into a bull-trap on a bounce. 

As we've all learned in life, picking bottoms can be a messy business! I want to see some confirmed upside momentum before I put my money to work as a spec. Picking the exact bottom isn't nearly as important to me as making sure it's not a head-fake.

The next USDA report is in two weeks, Friday May 10. I don't see why the funds would want to bust out ahead of those numbers. It doesn't seem like there's anything for them to be scared of... South American production is probably moving higher and U.S. demand probably moving lower.   

Follow my daily report by clicking here for a 30-day free trial!

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.