What to do with Corn

Over the past 3 weeks the Corn market has been a little bit volatile. This isn’t the rip your face of double limit up volatility of years past, but volatility in the new sense, the new normal…for now.

We’ve seen 2 USDA reports try to push this market lower, only to have it rebound higher in the days after. Mid-September, we saw huge, record high yields, above everyone’s expectations. The market sold off hard, but for some reason, 5 days later, buying resumed and pushed it back to pre-report levels.

Just last Friday we saw the USDA estimate stocks above all expectations, it pushed the market down 8 1/2¢, only to have it bounce 9 1/2¢ yesterday.

Analysts have been scrambling to explain. They throw everything at the board and see what sticks. If you throw out all possibilities, one has to be right. Then you can go back weeks later and say “see, we got it right.” But the truth is that none of that helps for analyzing the market going forward.

What do we say? This market is confusing, and who knows why we keep bouncing. Our personal opinion is that this algos out of control, overreacting to information that shouldn’t be market moving. But the reality is that the market is moving. And despite all fundamental news telling us the price should be lower, the market doesn’t want to trade sub 350. So why fight it? We say don’t. We don’t see a lot of upside here, but the market doesn’t want to break much either. For less sophisticated investor, sit on the sidelines and wait for a better opportunity. For the risk takers, sell strangles. For those in between, sell spreads.

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