WEEKLY CORN REVIEW: Bearish Options Expiration Could Pressure Corn
Corn tries to hold line against serious break.
Bryce Knorr
Published: Feb 23, 2009
The corn market at times last week looked like the stable big brother, trying to withstand erratic behavior from the rest of the family — soybeans, wheat, stocks, you name it. But corn faces an important test in the week ahead, as it tries to hold the line against a more serious break.
Without help from the rest of the family, however, that could be a difficult task to start the week. March futures withstood an assault that threatened to take the nearby below $3.50 due largely to support from those holding more than 12,000 at-the-money puts. Even though those options expired out of the money by a quarter-cent, 3,574 were exercised. Open interest in corn options fell by almost 475,000 contracts on the expiration, taking still more fund money out of the complex.
Moreover, Friday's CFTC Commitment of Traders report showed speculative hedge funds adding 25,000 contracts to their net short position, which is at the most bearish reading since the new system started tracking in January 2006.
To read Bryce Knorr's complete weekly corn review, click HERE.
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