Monday trading on the Chicago Board of Trade was a demonstration of why we use targets.
The corn futures were sharply higher, nearing the four-month highs. Then, they turned around and lost most of the gains. Overnight they were sharply lower. If ya blink, ya miss it!
Most producers are not married to their screens enough to see this happen. Those with targets in exactly the right place saw them filled.
It is an axiom of the grain trade that corn almost always confirms its high. There is no telling how long the high lasts. Yesterday it was just a few minutes.
Significantly, the high of the day was just off the recent high, and the market has now run away from it.
Also significantly, we only got near the high in the old crop. The new crop high was still 22 cents off the old high.
May corn futures on the Chicago Board of Trade reached 6.65 1/4 in early trading. That was up almost 11 cents, and 13 off the low. It did not last, closing at 6.60 3/4. Then, overnight, we are down 7 3/4. That puts us back to 6.53.
Meanwhile the December futures got to 5.97, but the old Jan. 3 high was 5.97.
The excitement that drove the market was based on prospective business to China. It is said their corn crop will be smaller, their needs higher. The excitement over the increased business was blunted by talk of export levels at the low end of trade expectations.
So, we are going to increase trade…whoops, we are now smaller in trade. At the end of the day we were counting only the hatched eggs.
The excitement did not carry as much over into the December futures, so this feels like an export market for the moment. Stay tuned, however.
Any China news gets amplified in the market. There is more psychological pop from news there than any other place. Usually China news is about soybeans.
Monday the beans just continued the recent pattern of slightly higher highs. We have been mostly higher for two months, with May soybean futures now getting to 13.36 1/2. That price did not hold the highs Monday, and broke to an overnight close at 13.19 1/4, down 5 3/4.
If soybeans do not have good gains today, we will have changed the look of a very bullish chart. I have been leery of a chart that has beans making gains every day while corn is mostly sideways. At the least, that changed yesterday. Corn was the leader, although briefly.
Regardless of the fickle nature, somewhere close here is lurking good sales opportunities, both old and new crop.
The new prices are disappointing versus the old, but that is reality. When good news cannot sustain a rally, the rally has petered out.