Illinois Governor Bruce Rauner asked the U.S. Department of Agriculture to declare a disaster in areas of the state hit hard by flooding. He should have asked for disaster relief on behalf of all the nation’s corn.
Illinois was the nation’s #2 producer of corn in 2014, but the potential damage from on-going flooding in the state is not helping to prop up the price of corn. June was Illinois’s wettest June on record and so far in July central parts of the state are already double normal levels. Unfazed, traders have sent corn spiraling downward the last two weeks as the grain rejoins the on-going collapse in commodities.
Last month, it seemed like corn, and by extension the Teucrium Corn Fund (NYSE:CORN), had finally found a resting spot in relief from an extended sell-off that started anew with the new year. Corn reports at the end of June helped to confirm the rally in CORN. This rally ran about 20% in just one month, but it is getting a serious test here. CORN has completely reversed the gains from the Grain Stocks report on June 30th. CORN closed Friday teetering right at its 50-day moving average (DMA) (red line in the chart below).
Teucrium Corn ETF (CORN) is suffering from a sell-off as sharp as the preceding rally. Only the 50DMA stands now between a resumption of the downtrend and hope for a recovery
Since I did not manage to buy an additional tranche of CORN shares to play the last rally, I do not have a profit cushion to help take the sting out of the current sell-off. Per my commodity crash playbook, I WILL be looking for the next buy point. Short-term traders can consider a purchase here if CORN manages to jump on Monday and demonstrate that the 50DMA has become likely support. Shorts are likely to press their bets if CORN cannot hold current levels. Grain Hedge is also looking at technical factors to support the price of corn at this juncture.
Be careful out there!
Full disclosure: long CORN