Corn has been in a steady climb since last week Thursday as traders focus on a stretch of dry weather in Argentina. Commodity traders are concern that drought in Argentina, one of the world’s biggest corn exporters, will lead to smaller harvests.
The March corn futures contract has rose for seven days straight with corn prices up $5.00 per contract to $639.75. Since hitting a low of $572.75 per contract, price has bounced off the price level 3 times, only to hit resistance at $665.08 and retreat back toward the low.
Watch Argentine weather closely for hints and signs surrounding the March harvest yield. With a well-defined price range, traders can play a breakout to either side.
You can also gain exposure to the corn market through the Teucrium Corn Fund (CORN, quote) ETF, which seeks to replicate, net of expenses, the daily changes in percentage terms of a weighted average of the closing settlement prices for three futures contracts for corn that are traded on the CBOT, specifically (1) the second-to-expire CBOT corn futures contract, weighted 35%, (2) the third-to-expire CBOT corn futures contract, weighted 30%, and (3) the CBOT corn futures contract expiring in the December following the expiration month of the third-to-expire contract, weighted 35%.
The fund will invest in corn futures contracts and may also invest in corn-based swap agreements, short-term obligations of the US government and/or cash equivalents.
Traders will find similar trading band prevailing in the CORN ETF from the bottom of the range at $37.62 to the upper at $43.79 and set STOP entry orders on the top and bottom to grab a breakout to either direction.
If Argentina’s March harvest fails to move the needle in either direction traders can look to trade the rangebound price but remain cautious.