Corn bulls have taken a step back as trade with Mexico comes into question. At the same time, traders continue to debate a number of important metrics and variables associated with the U.S. crop. Most inside the trade are content using an ending stocks number of between 1.2 billion and 1.5 billion bushels. The question is not only U.S. production, but how much demand erosion will we see as prices continue to push higher? Obviously, there are ton of moving parts and nobody knows for certain, but the balance sheet is certainly thought to be a lot tighter than we have seen the past couple of years. Personally, I've been bullish from the bottom and remain BULLISH!
I don't understand the analysts and traders who are talking about a range-bound market or a market that is way overbought. Sorry, I'm just not anywhere on that page. I remind everyone of the psychological phenomena known as "recency effective." When the stock market bottomed in March 2009, it took months, and even years, for most to become believers in the bull market. I still know intelligent individuals who are still buying the "doom and gloom." It's human nature to always remember the most recent painful experience and use it as a guide moving forward. I'm telling you now, if you've been trading or have been heavily vested in the corn market, it's going to be hard to psychologically shake the past seven years of deteriorating prices. In other words, don't get tripped up in the natural tendency to recall and focus on where prices WERE, rather than recognizing and adjusting to the new imminent threats that are now on our radar.
In all markets, I constantly ask myself what has happened during the past few weeks, which is now in my rearview mirror, and how is that impacting and influencing my current judgment. I promise, the "recency effect" plays a major role in how we view the markets. Also, always remember: Most bulls are generally viewed as nothing more than cheerleaders. Bears, on the other hand, always sound much more intelligent by quoting factual numbers from the past.
I’m staying bulled up! I will be looking to buy a deeper break associated with the Mexican trade headlines. Pay close attention!