Markets don't go up or down forever, and by the end of last week signs finally emerged to suggest corn was trying to hit at least a short-term bottom. While both old and new crop contracts have more downside before hitting 2008 lows around $3.05, divergence on the daily chart was a hint selling momentum was starting to fade.
But open interest is stable, with index funds slowly building their net long position again according to Friday's CFTC report. That's as good an indication as any that the money flow wants to be long food and sees corn as a decent value. However, those who follow the trend — speculative hedge funds — smelled the blood of bearish fundamentals and kept pressing, moving to a net short position.
Indeed, on the face of it, the supply and demand situation isn't exciting. Crop ratings remain above average, and recent bearish acreage and stocks reports make it difficult to statistically project anything but adequate stocks.
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