Market Monitor: Another leg up in the grain market

Six weeks ago, and a little more, we finally made the big highs in corn and soybeans. I had been impatient, had predicted highs several times, and was finally right. As prices broke there were, as usual, technicians who said there was still room on the chart for one more leg up.

Leg up

Then prices broke hard. One more leg up? Yeah, sure! Time to get grain sold before it got away from us. Well, as they say, that was then and this is now. Now we have new highs in corn and beans, and are back near the top in wheat. Now we are back to picking the top and wondering when we get there if analysts will pop up saying there is room for one more leg.

Corn futures

March corn futures have demonstrated a clear down-trend, then a clear up-trend. Almost every day we have seen a trade sometime that is higher than the high the day before, even if we don’t close higher. On Nov. 9 we had a high of 6.17 1/4, then dropped nearly a buck to 5.20 1/4. On Monday and again on the Monday-Tuesday overnight we have seen a new high of 6.19, back up close to a dollar.

So far one can argue whether that is a new high or a confirmation of the old high. The numbers are close to the same. This means the next few days are significant. Do we actually make a leg higher in the charts, or are we just making a double top, which is a very negative sign. Either way, here is a selling opportunity. Cash farm prices for the summer are now close to $6, and the question is whether to be brave or foolish selling or waiting to see if we go higher.

Soybean futures

The March soybeans are now well into new territory, knocking on the door of $14. Beans in the teens, well into the teens! This did not happen easily. The last high was 13.54 1/2 on Nov. 12. Just five days later we were at 11.83. That is a drop that defines “ugly” and was depressing at the time. Here were are, though, just a month and a little later, and the overnight going into Tuesday has us at 13.96 3/4. So, here two we are looking at one more leg up, but in the beans we have actually made at least part of the leg instead of just confirming the high. We are more than 40 cents above the old high, and made another gain this morning before the daily open.

Wheat futures

The March wheat futures have not shown a clear chart, having many erratic days. Nevertheless, a look here confirms a return near the high. On Nov. 11 we had a low of 6.56 1/4, just after the corn made a high, and just when the beans crashed, also. By the 7th of December, however, the March wheat futures had bounced to 8.11. What followed was ugly, though. We dropped to 7.58, but now have come back to 7.90. Maybe the high is in sight.

Market bounce. Some of the bounce came after USDA reports in December, but for the life of me, I could not have said that anything in them was a help. This seems to be a trading cycle that is determined to put in another leg, and may just be driven by outside computer trading of huge and fickle positions. The next real fundamental news is just ahead of us, with the January Inventory Reports.

This will confirm the reason we are trading higher, or it will but the top in, or it will confirm the top that may be made before the reports are released.

In any case, these are touchy times, and judicious sales are required.