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Corn

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Anonymous

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December corn has worked itself into a huge triangle. Text books suggest that the break out should occur in the same direction as the market was trading prior to the break out. In this case the market was trading higher, topped, and began forming the triangle. Hence, one should be anticipating the break out of this triangle to come to the upside. The break is most often anticipated to be the length of the widest part of the triangle. In this case that would be from the $2.47 high to the $2.15&1/4 low which is $.31&3/4. The length of time in this triangle has reduced the volatility significantly. Low volatility can make for some opportunities in the options markets that do not ordinarily exist. At times the option volatiltiy can still be significant in relation to the futures or vice versa. For feedlots and feedlot clients the risk here lies in a corn market with the potential to trade higher with the possibility of an explosion up and out of this range. With fats not offeing much in the way of a roaring bull market and the excessively high price that was paid for feeders, corn has become a wild card. How do you play this wild card? If you would like help in managing the risk of this potential up move in corn prices, please feel free to contact me and I will glad to work with you on reducing the risk of adverse price fluctuation. Toll Free 1-877-863-2206

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