Market Thoughts 10.30.22
Dec corn lost 3’4 last week to close at 680’6. It was another inside side week and the entire week’s trading occurring in just a 13 cent range. This is now the eight straight week Dec corn has closed between 675 and 690 as consolidation continues. Nov beans lost 7’6 to close at 1387’6 as that contract also had its quietest/narrowest week of trading in months. Dec spring wheat lost 16’4 and closed near its lows at 945’0, lowest weekly close since September 12th.
It’s now been two weeks since Dec corn futures had a textbook technical breakout lower; one that was perfectly timed with our expectation for corn to drop 30-40 cents to a harvest low. Mississippi river issues, Argentine soybean sales and a surging USD thrown alongside harvest pressure seemed like enough to inspire such an outcome. Since that breakout though, corn has proceeded to just trade sideways with two weeks’ worth of daily closes all between 678 and 686, causing us to conclude if that’s the extent of the correction in response to the above bearish factors, it bodes pretty well for a post-harvest recovery.
It appears waterborne grain exports from Ukraine will once again be halted if Twitter has this right. And given wheat’s performance this week, it also appears as though trade was not expecting this outcome. This definitely should get wheat futures working higher again.
So what happens now? Harvest winding down, beans lean into bullish seasonal with strong recent export sales and record crusher margins, corn fails to break lower on bearish news and once again bullish news from Ukraine; it’s most probable the next move is higher when grains finally break out of this consolidation.
One possible word of caution, strong buy signal on our Dollar Index Price Signal chart last week. It’s been a month since the USD last made fresh 22 year highs and now it looks set to resume its uptrend.