A corn market low is expected in August, analyst says
It was another choppy week of trade in the grain markets. Wow, the grain markets have been volatile!
Last week, September corn closed up 25¢. The previous week corn was down 65¢ and so far this week, September corn is 20¢ higher. Key chart areas I am watching are: With September closing above resistance at $5.72 the first chart objective is the top of the gap at $5.88 and then the early July high at $6.26.
August soybeans closed up 74¢ last week. The previous week soybeans were down 54¢. So far this week, August soybeans are up 3¢ a bushel.
The month of July can be trendless with choppy markets the norm, the volatility this year has been one for the record books. You need to be disciplined and avoid buying big rallies or placing hedges when prices collapse and you make an emotional decision.
In addition to watching the short term and long-term trends, I am watching a couple of interesting chart cycles on my hand drawn charts.
First, the monthly pattern where the corn and soybean markets have been putting in highs around day 7 to 12 each month and then the lows have come in between day 25 and the last trading day of the month.
This pattern has worked better in corn than soybeans.
Another longer-term pattern that I wrote about in the August 2020 Successful Farming article is about a three-month low-to-low market cycle. Since late August of 2020, the corn market has put in a low about every 15 to 18 weeks. The last major low came in the last week of March. Depending on what I count as week one, this pattern suggests a low in late July or by the first week of August.
For soybeans, the pattern has not been as consistent, but the timing has been quite similar with the next low and change of trend due in the last week of July or the first week of August.
Final thoughts. I am not getting bullish. My charts show a major high in early May and a secondary high in July. After the recent hard down move in the grain markets, I would not be surprised to see a low in early August.
Note: The risk of loss in trading futures and/or options is substantial, and each investor and/or trader must consider whether this is a suitable investment. Past performance – whether actual or indicated by simulated historical tests of strategies – is not indicative of future results. Trading advice reflects good-faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice given will result in profitable trades.
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