The perils of grain market prognostication


A month ago, I told you the lows were in. I said mark your calendars, it had finally happened, after precipitous declines.

I was w-wr-wr-wrong.

It is hard to admit it, but prices made big gains, then crashed again. I said “even a blind hog finds an acorn once in awhile.” Those acorn are tasting more like horse apples this morning. I might as well admit the obvious.

The stock market took another dive, and it took the grains with it. During the day Monday the Dow was off 400 and some points, and the grains were down 10, 10, and 50. All round numbers. I could not make myself really look closely.

Another day, another non-dollar.

On Oct. 30, when I was feeling smug and sticking my neck out, December corn had made a low of 3.64 and bounced 25 cents. November soybeans had hit 8.25, then bounced 57 cents. December wheat futures made a 4.96 low before a 19-cent gain. As they say, that was then, but this is now.

Now we have corn way below those old lows, and beans and wheat back to them, or slightly lower. When the December corn was making its low, March futures were at 3.89. Now they are 3.45, 44 cents lower. Yuck!

In the meantime, they had climbed out of the hole to post a recent high of 4.50, 61 cents above the old low. Now we are 1.05 off that high, with little support showing.

The soybeans made a low Oct. 16 at 8.38 1/2. On Nov. 21, were down to 8.35. That is not much of a change until you notice that in between they were up to 9.81 3/4, 1.43 1/2 above the old high. You can see how I thought the low was in!

Only the wheat shows some signs of calm, if calm is a 90-cent range. The chart is so tall with the big prices that we have seen, that the trading the last month doesn’t look like much until you look at the actual numbers.

We have been 90 cents top to bottom, but have not changed the lows much. We are back to 5.34 overnight. The old low was 5.18 March futures Oct. 24. The new low was on the 21st at 5.15 1/4.

So, we are seeing some volatility, but strong support and a tendency to get back down to that support on any excuse.

Blame the economy

The excuse remains the outside markets, especially the stock market. The correlation there is a factor of traders losing money in the one market and taking it out of the other. The more fundamental relationship is that, in periods of recession, and we are now officially in one for the first time, after hearing politicians claim it for campaign reasons, a commodity is a commodity. They all tend to get cheaper.

Gasoline goes down, corn goes down.

Fertilizer stays up.

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