2012-05-07 Trading Corn



Here we will observe an attempt at trading corn. I have decided to enter into a trade for the December 2012 delivery futures contract of corn. Besides the fact that we are now entering into a time of year when the possibility of seeing a seasonal low may occur, I have also observed what appears to be an MACD divergence forming on the daily time period chart. However, it is still possible for this MACD divergence to be broken in prices don't rally during the day session on Monday.

Trading corn entry was made at 00:57 at a price of 517.5 on 2012-05-07. My first profit target will be in the 540 range. However, considering the potential for a seasonal low and a potential prolonged rally I will be keeping a careful eye for signs of a "break-out". If such a thing should occur, I will be tempted to hold the position. This is the primary reason I am trading the December corn contract, rather than a July or September. Last year, the pivot point that led to a year-long rally was the July 4th long weekend, and subsequent WASDE report. Some people that follow agricultural futures seem to thing that July 4th is often a pivot point in agricultural commodity prices. I suppose this is because by July 4th, and the subsequent WASDE report, people pretty well know what the crops are going to look like. I don't really know.

Observe the chart below to see my trade entry point.

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Some people that follow agricultural commodities look to oats futures prices as a type of harbinger of prices of other ag commodities like corn and wheat. Last year, oats prices "broke out" sharply upwards a full month before wheat and corn. Whether this happens regularly or not, I don't know. However, right now, oats prices seem to be making a big MACD divergence pointing to lower prices. We all know nothing is written in stone in any market, and I am not really to sure on what the logic is behind this idea of oats forecasting the prices of other grains. I remember last year it was because flooding wiped out a lot of the Canadian oat crops. Later in the year, I think it was flooding that also wiped out a lot of the wheat crops. I don't know if anything actually happened to corn, or if it was just rising because grains in general were in tight supply.

In summary, I will be keeping a watchful eye on corn over the next many weeks, and I will be keeping a tight stop on my current corn trading attempt.

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