So what happens now? Recent market behavior fits fairly well with the longer term bearish outlook we’ve maintained for months. Expectations we made a while ago for harvest 2023 to feature 4.50ish corn and 7.50ish wheat don’t seem so far-fetched now. Unfortunately though, we’ve also been pretty certain that a short-term rally was in store, and that idea hasn’t fared particularly well. How likely is it then that selling eases for now and grains mount a rally of some degree? A few things that offer some insight:
All four new crop price signal charts were Strong Buy as of Friday. The last time this happened was July 21st, which coincided with the summer lows for grains and a substantial subsequent rally.
We still think it’s most probable the Ukraine export deal goes away after May 18th and that the market isn’t pricing in today the risk of that occurring.
We’ve been illustrating the seasonal comparison to 2013 for a long time but it’s also worth noting the spring/summer seasonal in any year. First, there has only been one year this century that corn made a calendar year high prior to April. Unfortunately, that year was 2013…Nonetheless, there is an overwhelmingly strong seasonal tendency for grains to rally after April. Second, even 2013 featured a 60-cent rally from lows made on 4/24 and 5/21. In other words..