Corn continues to trade in an extremely tight range as neither the U.S. crop or the highly important second-crop of Brazil are in the ground. In other words, there's not a lot of "weather" in the headlines to excite the bulls.
We also have the head winds from the outside macro space which remain extremely negative for commodities as strength in the U.S. dollar and weakness in crude oil keep the trade nervous. I remain of the perspective, that without a weather story and little to any bullish interest by the larger money-managers in being long commodities, it's tough to generate much sustained uphill price momentum.
From a technical view, I could envision the corn market trading in a range of between $3.40 and $3.80 between now and the end-of-February, when the USDA hosts their annual Ag Outlook Forum. From that point I have to imagine we will be digesting thoughts of +1 to +2 million more corn acres in 2016 with a trend-line yield of near 167 bushels per acre. This obviously will not be billed as bullish and may allow the bears to push for yet another leg lower and perhaps a retest of the $3.20 area. From that point I'm hoping we've digested the most optimistic views for the upcoming 2016 U.S. crop and we start to see some shifts in the macro space that create a less overall bearish commodity environment.
I continue to target April-May-June as our next opportunity to reduce more price-risk. As a producer, I'm afraid between now and then sustained bullish rallies will remain far and few between. I would suspect the strong basis towards the East will remain in play and may in fact start to spread as farmers remain reluctant to sell. As spec I have to imagine we will continue to see the larger players selling into the rallies as the macro space continues to dictate. Longer-term I continue to like the thought of building bullish strategies on a break sub-$3.40.