The selling spree in corn continued today after the U.S. Department of Agriculture released their Grain Stocks report. The December Corn contract, traded on the Chicago Board of Trade, was down 12.4 cents per bushel to $4.41 1/2 or 2.75% for the day, capping off a quarter where the contract was down roughly 13%. This is the lowest level that corn has settled in over two years or September 2010 to be exact.
With larger than expected inventories of corn reported today (824 million bushels reported versus a USDA expectation of 661 million), I would expect that we will continue to see some pricing pressure on corn, which will likely flow through to other AG's like Soybeans (the November contract was down 2.8% today settling at 12.82 ¾). Looking back to earlier this month (September 12th), the USDA reported that they expected this to be a record year the U.S. corn crop, and while the late summer hot, dry spell likely negatively impacted the soybean crop, it would still be a very large harvest.
Other markets experienced similar levels of volatility today as well. Both December contracts in Gold and Silver traded lower by more than .50% on the COMEX today, closing at 1327 and 21.708, respectively. A continuation of their wild swings experienced since the Fed announcement nearly two weeks ago.
Similarly, the equity index markets suffered heavily under the uncertainty around the budget conversations on Capitol Hill. During the course of the day the December S&P future traded as low as 1669.40, ending the day at 1674.30 down .71%. With the budget discussion seemingly at a standstill, and a government shutdown imminent, it is likely that the S&P's continue to find themselves under selling pressure until we achieve some level of clarity in Washington DC.
With that said, I continue to watch this 1670 level in the S&P as "my line in the sand", as a break below this level could have us quickly trading back to that 1650 level seen earlier in the month. Additionally, let's not forget that tomorrow is the start of our October trade, which historically experiences higher levels of volatility than other months. Keeping that in mind, remain fluid with the market and always have an exit plan surrounding your trade (both to the upside and downside).
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