December 2021 (Dec21) corn futures (the benchmark for 2021 corn production) finished the week higher by 6.25-cents (~1.53%), settling at $4.1450/bushel - the highest weekly settlement for Dec21 since October 2019. This week's price action took place in an 8.50-cent (~2.08%) range. The week's high of $4.1475 is a new 52-week high.

The corn demand index we unveiled last week was up ~2.53% this week. April 2022 futures for crude oil led the way posting gains of ~4.16%. Fundamental discussions should still note increasing concerns over COVID-19, uncertainty surrounding future executive branch policy, and the Georgia Senate races. Any of those three factors continue to provide potential sources of volatility. These factors are especially concerning where they impact U.S. and Chinese trade relations.

Technically speaking, Dec21 corn futures remain in an uptrend that started from the August lows. Various momentum indicators on the daily and weekly charts remain in overbought territory, with several continuing to display notable bearish divergences. The contract high of $4.2500/bushel set on April 23rd, 2018, looms just over the market.

The options market for the 2021 crop year remains relatively illiquid. We continue to hold a few near-the-money short-dated March puts to protect our Quartzite Precision Marketing clients until the spring price begins setting in February. Despite this week's rally, implied volatility for near-term short-dated new crop options on the 2021 crop softened this week. We currently see the most value in the June and August short-dated new crop options. However, liquidity concerns could prevent establishing positions at favorable levels.

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Looking ahead to next week for Dec21 corn futures, we would consider movement within the $4.0725-$4.2175 per bushel range to be unremarkable. Notable moves would extend to the $3.9325-$4.3700 per bushel range. Price action beyond that would be extreme. It will be a few weeks before we return to publishing a chart of these levels versus price action. Be sure to visit our Twitter page to vote in the weekly poll we hold there each week. While you are there, give us a follow.

Looking at the Spring and Fall prices for crop insurance this week, both distributions shifted slightly higher due to this week's rally. However, the passage of time and reduced implied volatilities in the options markets have slightly narrowed both distributions. For example, our model shows the likelihood of setting the Spring price higher than $5.05/bushel decreasing this week despite the rally. See the charts below for distribution and cumulative probability charts for both the Spring and Fall crop insurance prices.

We added a short article about Dynamic Hedging to our Tools and Tactics section this week. We are hard at work on a much more in-depth article on Option Deltas for next week.

Thanks for taking the time to read. We look forward to your questions and feedback. Please feel free to contact us via our contact form, Facebook, Twitter, email, or phone at (970)294-1379. Thanks again. Have a great week.

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