Market Thoughts 08.21.22
Sep corn opened sharply lower last Sunday night and at one point off 32 cents from Friday’s close before rallying to finish at 626’0 down 13’6. Another inside week for corn as the high and low were both within the range of the prior week’s trade and despite the modest weekly loss no major chart damage was done. Sep beans lost 46’2 to finish at 1488’6; still the second highest weekly close for that contract since making highs in early June. Another brutal week for spring wheat with the Sep contract down 70 cents at one point, taking out recent lows and dropping all the way to 850 before recovering to close the week at 874’6.
The past week wasn’t exactly what we were looking for in the previous edition of Market Thoughts commentary. Last week featured a textbook chart breakout with bullish USDA supply news and confirmation of the longer term biofuels demand story while plenty of weather/crop uncertainty festered in the western Corn Belt. This seemed to be plenty for corn and beans to keep adding to their breakout higher. Instead, improving weather and a slate of ugly Chinese economic news had row crops struggle out of the gates, invalidating the technical breakout in the process and closing lower on the week. We probably should have stuck with our conclusion from two weeks ago – corn and beans defended that early weakness well and remain range bound, a pattern that seems likely to continue.
We’ve been tracking the seasonal comparison to ’11 and ‘08 for nearly a year now and interesting to again revisit it with all three commodities. Corn has been trending higher since late July and is in-between same-date levels in ’11 and ’08. Nov 22 beans are actually higher than ’11 beans were on the same date. Spring wheat is still in a well-defined down trend that goes all the way back to the contract highs in mid-May and is significantly lower than both ’11 and ’08 were on this date. 2022 hasn’t lined up perfectly with either year recently and we don’t expect anywhere near the 2008-level economic debacle that pushed grains off a cliff in late September. That said, the 2011 rally stalled in late August and both ‘11 and ’08 saw weaker trade during September.
September Corn Daily Chart – consolidation in a somewhat wide range: Going back to July 1st, September corn has touched somewhere between 590-620 in all but three days.