July corn futures are still trapped in a well-defined trading range between the May high of $3.96 1/2 and the May low of $3.54. Swing traders have had success the past few weeks by getting long at the bottom of the trading range and by getting short at the top of the range. The direction in which July corn sees a “breakout” from this trading range is likely to be the next significant trend in the market. As the calendar turns to June this week, the grain futures markets enter what are arguably the three most volatile trading months of the year–June, July and August. Weather forecasts for the U.S. Corn Belt will be paramount.
To narrow this window a bit more, the six-week time period following the Fourth of July holiday and into mid-August is typically the hottest of the year in the Corn Belt–and the timeframe when the most significant weather market scares occur in corn and soybean futures.
click on the chart to enlarge
Here’s a scenario that would not surprise me, heading into the key summer growing months for the grains: If weather forecasts remain benign for the Corn Belt, we’ll see choppy to lower price action for the grain futures heading into the Fourth of July holiday. Then the week or two after the Fourth of July holiday will determine the fate of grain futures bulls and bears through the end of the summer and into the fall harvest. The caveat is that if the weather forecasters start to turn off the precip spigot and crank up the temperatures before the critical Fourth of July holiday timeframe, then grain futures bulls will get kicked into high gear early. Veteran and highly respected grain trader and analyst Conrad Leslie once told me: “Following the July Fourth holiday, those who are interested in soybean and corn prices and production estimates look to the skies for the next two months for weather developments. Historical statistics indicate crops can either improve or decline and there’s no set pattern.” Indeed, it’s all about the weather in the Corn Belt this summer.–Stay tuned!
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