Market Monitor

By Marlin Clark

Corn market steady by jerks

Picking the top is an inexact science, mostly defined after the prices go down and the top is apparent.

Regular readers have watched me struggle to study the price movements the last few weeks. I am glad to have been able to provide a little humor as you laugh at the struggle.

Once again it is Tuesday morning, and once again I am trying to pass on insight that I don't really have. Prices are sharply lower on the overnight trading, but does that mean anything? The corn has continued to trade above the report gap, but with weakness apparent on some days. Meanwhile, trading seems to be focused more on the soybeans, with trade there still in an uptrend.

November soybeans gapped from $11.35 to $11.50-3/4 the Monday after the USDA Crop Production Report. It continued an uptrend, making a double high of 12.23-1/2 on October 21^st and again on the 25^th. It is currently trading 12.12-1/4, down 5-3/4 overnight. Volatility is such that being a dime or so below the high does not mean anything.

It continues to amaze me that the big bean crop is being discounted into higher prices. On the one hand, these are great prices, and when they come at harvest they may be the high for the year. On the other hand, everyone is cautious about being short. Soybean futures have gained most of $2 in this month so far. USDA cut the production number a little, but this seems like a huge over-reaction. I have to remember that the market is always right.

December corn futures continue to consolidate above the gap. This so far continues to feed the island formation, which is a pattern of trades above the trend line, separated by the report gap, the blank spot on the chart left by the reaction to the USDA report. As discussed a couple of weeks ago, this can be a dangerous formation. We can fall back through the gap to sharply lower prices, or we can use this as a staging ground to go higher, and there is no island.

Prices have had strong volatility, but have stayed in a range of 5.50 to 5.85 for the most part. That is a big range, but price change means nothing within that until there is a change of direction. Prices are thus "steady by jerks."

Right now it feels like the beans are holding the corn up and the corn prices will fall when beans top out. Then again, I may be wrong.

The wheat futures continue to stagger along, held up by the other grains. They are forming somewhat of a pennant, as the trade volatility stays in the same range but gets smaller. So, we will see a trend change soon. That can be up or down.

This time of year the wheat gets ignored, as most elevators will not touch it while being buried in corn and soybeans. Farmers who are watching and wanting to sell next year's crop will discover that, in these times of margin call mania, traders are reluctant to book anything and basis is historically weak.

 

 

 

 

 

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