The mood has changed in the markets and we still have not seen the end of the price declines that have characterized trading for a month.
A month ago, it was all about the flooding — the cap on a wild market that had given us all-time high prices when everything that could be bullish was.
Then, the flooding was ruining the crops in a major part of Iowa and other river-dominated states. Now, the corn crop is seen to be recovering dramatically from the flooding and the weather is described as resembling a greenhouse.
Then, December corn futures were making the high at just a fraction under $8 June 27. Now, December futures followed the limit-down move Aug. 4 with a 16-cent loss late Aug. 4 and early Aug. 5. We are now at $5.39 1/4, $2.60 off the high.
Soybeans are a similar shock. The November futures high was an unbelievable (we used that word a lot this year) $16.35 1/2 July 3. That was a run-up from $10.60 the first of April, followed by — can you imagine? — a $3.40 1/2 decline to the overnight low Aug. 5 of $12.55. Did you ever think you would complain about $12.55 beans?
Why not complain about the $2.25 crash in wheat since the end of June? There, the wheat had already declined from $12.78 September futures to $7.46 1/2. But, the corn and bean rallies helped the wheat bounce to $9.71 3/4.
Who’d a thunk it?
The possible explanation point on the major mood change that has ravaged prices was a private estimate being talked about this week. Would you believe, 12.2 billion bushels of corn this year?
Think about this. We started out cutting acres, then had late planting, then had wet, cool weather, then had denitrification from too much rain, then had record flooding in Iowa and Indiana. After that, we even had a weather scare of hot, dry weather. The hot and dry did not materialize and that began the price slide.
We have always known that the end of June is the traditional time for a market high on the new crop. Now, we look back and see that is true once again. The worst fears were in the market then. Now the fear is gone.
The corn crop is normally made in July, but is using some of August to finish recovering. The bean crop is made in August and the forecasts are perfect.
The market is looking for a technical place to bounce. We just went through support on corn and beans and are looking for more support points below us. For corn that may be 20 cents lower. For beans it is a little farther down.
With any excuse we will retrace for no other reason that that is the way the market works. We are hunting for an excuse and not finding one.