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(March 25, 2002) CORN: The net short position of the fund trader reached a historically high level on the recent break to contract lows. The market has faced a slew of bearish demand news in the past few years and trade expectations are high for a significant jump in planted acres, continued selling of corn from China on the world market and good weather in the U.S. this spring and summer. With fund traders net short over 73,000 contracts in mid March, it will not take much in the way of bullish demand or supply news to see at least a temporary change in trend.

SUGGESTED TRADING STRATEGY--1) Consider a power play: Sell one September corn 220 call and buy three September 250 calls for a net premium paid of near 6 cents. The premium will be lost on a continued downtrend but the effective net long position will increase to a maximum of two contracts as the market rallies. 2) Buy December corn at 224 ? with an objective of 239. Risk 5 cents from entry.


 
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