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As aggressive fund buying subsided into early 2015, realization of excessive stocks and lackluster demand plummeted the corn market and new contract lows were attained in June 2015. However, CIS began alerting subscribers to the potential for a stocks reduction by the USDA and the lack of weather premium as early as June 6. The following excerpts were taken from issues of Price Perceptions during the summer of 2015.
 
Click a number on the chart to display comment from the related issue...
1. 06/06/15 “We are entering the time of year for the marketplace to build in a ‘weather premium’ for new crop in case weather trends change into the critical pollination period.”
(Comments in entirety)
“Currently, a great deal of bearishness has already been discounted in new crop futures. Therefore, we expect December futures to also stabilize near recent lows in weeks ahead until more is known about summer weather trends.”

(Comments in entirety)   (Back to chart)

 
2. 06/20/15 “The USDA reported feed/residual use for the first half of the season down 95 million bushels from last year. When feed use is down in this period, history indicates it is above the previous year in the March-May quarter. Therefore, the June 1 stocks report may be lower than expected by the trade. There are too many unknowns at this point in time to assume prices will continue the downtrend.”
(Comments in entirety)
“As indicated in the 6/6/15 issue, a great deal of known bearish news has been discounted in futures and traditionally the marketplace builds in a ‘weather premium’ before mid-July. Therefore, we continue to expect December futures to stabilize near recent lows until more is known about summer weather trends.”

(Comments in entirety)   (Back to chart)

 
3. 07/04/15 “The USDA surprised the trade with June 1 stocks reported at 4447 million bushels, 108 million below the average trade estimate. However, as illustrated in the 6/20/15 issue of Price Perceptions, our estimate of the stocks report was 4433 million, very close to the actual report.”
(Comments in entirety)
“Unless new significant damage occurs to the crop in weeks ahead, our economic value studies indicate the weather premium should not exceed the $4.50 level for December futures by any significant margin.” (The crop scare high was attained on 7/14/15 at $4.54.)

(Comments in entirety)   (Back to chart)

 
4. 07/18/15 “The recent price advance stimulated heavy farmer selling. It was so heavy piles of corn have been reported at country elevator locations. The 91 cent advance in December futures should have discounted all known crop damage to date.”
 
“The market also moved deep into the primary recovery zone shown previously from 4.33 to 4.69. However, an outside reversal occurred this week, indicating the advance may be ending.”

(Comments in entirety)   (Back to chart)

 

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TRADING IN COMMODITY FUTURES OR OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS.
PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
December 2015 Corn
©2015 CQG, Inc.
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