• jcrist18

Market Thoughts 10.24.21

Dec corn gained 12’2 to close the week at 538’0. Corn continues to be rangebound with two months’ worth of weekly closes all occurring between 517 and 541. Soybeans gained 2’6 for the week to close at 1220’4. Volatile times for that commodity as beans rallied 65 cents, trading to 1249 after having fallen to 1184 late last week; only to give 30 cents back by Friday’s close. Dec spring wheat gained 44 cents to close at 1013. This was the sixth straight weekly gain for wheat and apart from the 2008 runup, only the third week ever that spring wheat has closed above 10.00.

We indicated two weeks ago that spring wheat would take out its recent highs and tack on a major leg higher; that contract obliged quite nicely, gaining 66 cents since you last heard from us. So what happens next? A couple charts that give a pretty good hint:

Dec 2021 Spring Wheat Daily Chart

o There’s really only been two other analog moments to this one for spring wheat – July 2017 and March 2008. Both of those years featured an orderly move to new contract highs over a three-four week period, followed by an explosive breakout. After an incredibly neat/orderly move higher for Dec 2021 spring wheat, it appears Friday’s trade was the first day of that breakout. If so, expect sharply higher trade next…then sharply lower trade. No predictions as to how high/when etc. Rather, just pointing out the moment we are at now and to expect both sharply higher prices and major volatility.

Soybeans and corn continue to follow the 2011 seasonal pattern quite well, making our commentary over the last few months look very good in the process. To that end, it appears soybeans posted a seasonal low last Thursday, a thought further supported by our soybean price signal touching the buy threshold last Thursday. With corn and beans continuing to lack a fundamental story of their own and supported instead by fertilizer/fuel/inflation and runaway wheat prices, it still looks like corn will struggle to move above 550 and beans will struggle to get back to 1300.

o Worth noting, Canola Price Signal touched Sell Threshold last Tuesday. This was the first sell signal for Canola since June and coincided with futures trading to new all-time highs for the harvest contract and then a subsequent sharp drop to close out the week. It’s a bit bizarre to have a buy signal in beans and sell signal in canola occur four days apart but both make some sense given how different the fortunes of those two commodities have been lately.

At least for the moment, pause in the runup in nat gas/fertilizer futures prices

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