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cropsey, il 61731 | Why sell the calls - do you expect the market to go down further (call looses value in the downturn, buy it back cheaper or let it expire worthless)? There are margin calls if it goes up. I would guess you'd want to buy calls at the market low in hopes of it gaining in value as the market recovers, but maybe I'm thinking about this wrong.
Do we have any idea what the funds plan to do after they did their rebalancing last week? They seem to be the drivers these days - sometimes in step with our fundimentals and more often not. Were we really running out of corn in 08 and needed $7 corn to soften demand, or was it something on the fund side that made them want to buy? I noticed we didn't run out. The possibilities of 15% ethanol and low world corn stocks (so I've heard) would be fundimentals that would lead to higher prices this summer (maybe significantly), but will funds be on board? ADM, et al doesn't want $7 corn - they want $2 corn so I see the commercials which are normally affected by our fundimentals not being able to drive the market, leaving funds in control. I don't think funds completely ignore what's actually happening with our fundimentals, but it seems it's more of a fyi to them.
It seems the only place where our fundimentals have much control is basis - it doesn't compete with the larger flat price changes though.
Just an observation,
thanks,
Pat
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corn- panic or hold
