Market Monitor

By Marlin Clark

Looking for Mr. Goodbar Chart

The confusion that is price movement on the Chicago Board of Trade these days is only heightened by study of our modern brand of tea leaves or chicken entrails—the bar chart.

Yesterday I was looking at the September and December corn charts and thinking they looked like a head-and-shoulders top had formed. This is a very strong pattern that has a right and left "shoulder" and a head. It signals a very strong topping sign, and portends a strong move back down.

That was yesterday. Today, Turnaround Tuesday, I am looking at strong overnight markets that have prices up a nickel on corn and beans, a dime on wheat. So, what goes? Is this just a blip on the chart, or is the trend not established? Let's look back.

Wheat has been the strongest chart, and does not show a strong topping action. September Chicago wheat futures had a low clear back in early June at 4.42-1/2, then rose steadily to the July 22^nd high last week at 6.10. Quite a move! We are still trading 5.98 this Tuesday morning after a break Monday to 5.84-1/2.

September and December corn charts are very similar, so let's look at the December. There we put the low in on June 29^th at 3.43-1/4. Early the next day we were a quarter of a cent higher, then started a big rally. The high was actually two weeks ago, posting a 4.10 on July 15^th. Since then we broke to 3.76 on Monday, but have bounced seven cents off that overnight.

November soybeans are in a similar move, but with bigger swings. On July 1^st we had the low at 8.94, then rallied nearly a dollar to 9.92-3/4 by the 16^th. In the next ten days we lost a third of the gain, making a low Monday at 9.61. We bounced 11 cents off that this morning late in the overnight session.

The corn especially shows a head-and-top formation, but the overnight violates that. This makes the day trade Tuesday very important. Chatter off the Board this morning before the open is that the market is trading the expectation of a big crop against the strong demand for the old crop. The current demand is known, the big crop is not. That makes it easy for strong demand to drive the market in spurts for awhile.

The USDA Crop Condition Report has the maturity as measured by silking ahead of normal by 14 percent. This seems to continue to confirm the trend toward a big crop. The market continues to believe that an early crop is a record large crop.

The conditions around my world are improving, with some timely rains of more than two inches total in the last week after a week of hot weather and curled leaves. Current forecast expect rain over the Midwest this week, but hot and dry weather ten days ahead.

So, all that to say there is uncertainty in the markets, and that results in volatility. I have listened over the hot line this morning to one man looking for a corn rally back to 3.95 to 4.05 December futures. We are now 3.82-3/4, up almost five overnight and 15 minutes to the morning open. At the same time, another analyst from his same company just said he did not look for the rally to be strong or to hold. You pays your money and you takes your chance.

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.