WEEKLY GRAIN NEWSLETTER
By Jeremey Frost
This is Jeremey Frost with some not so fearless comments for www.dailymarketminute.com
We had the USDA report out on Friday and it was a rather “blah” report. But it was also a report that would have had my daughter using terms like “sus”.
What the report did do was decrease corn exports as most of the market suspected it would. But at the end of the day we had corn trade higher fractionally despite our carryout increasing by 75 million. That to me was “sus”.
Ever heard the saying sell the rumor and buy the fact. Well today was just that type of price action for our corn market. We fed the bears a little bit via decreasing our exports and increasing our projected corn carryout. On the surface many will still say that we need to pickup exports in a hurry or we will see more export cuts and increases in our carryout numbers in the future. This may very well be true, but folks someone today was buying our corn.
When the bears get exactly what they want and then they can’t break the market it tells me that finally we have climaxed as everyone has sold that wants to sell and most likely we have put in our lows. To me it feels like now we just need to give the funds a reason to want to play the commodity game.
Fundamentally we are tighter than a year ago for all of the major grains. (See below portion of history repeating itself). We have much more uncertainty than we did a year ago in terms of the likelihood of production in the world at least today.
What we don’t have in fund interest in our grains and oilseeds. Our open interest is down huge versus a year ago. Funds are finding safer bets with the higher interest rates. We do have charts that look somewhat similar and to me have potential all over them. We just simply need something to spark a fire. Perhaps that fire was getting started today by the Chinese? Someone was buying corn despite the bearish report. Was it them?
Here are a couple of daily corn charts of the nearby futures.
You can see that in the Summer of 21 we traded up north of 7.00 futures near the 7.50 level. We then broke down to 5.00. We followed that from a rally from our September lows to trade sideways from Nov to January. Then come March we found life and before you knew it we had corn north of 8.00 in May.
I don’t know for sure how this year will play out, but I have a feeling that corn is going to trade from about where it is at up towards 7.00 for the next month or two. Then I look for a rally from an acre war starting about March. I look for this rally to continue into May June and then depending on Mother Nature to either explode to new all time highs that shatter old highs or stall out near them.
The biggest concern I have looking at the following couple of corn charts is open interest. We need funds to get a hold of some story that they like. That story can be demand, inflation, war, SAM weather, US weather, some other pink swan event that isn't on the radar. But we need that story, even if it is just simply a story that gets the emotions wanting to buy, when they should be selling. If we get some story and I am sure we will get it and most likely it will be a seasonal tendency that we get nearly every year.
If you connect the tops and the bottoms you have a channel that could be used for good price projections for 2023.
The good news is that we have plenty of room for someone to want to get back into our markets. Open interest down is disappointing but we just need to find that reason to draw spectators back in.
Here is the mentioned channel, the top of the channel is north of 9.00 corn futures come May/June time period.
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What’s Included In Today’s Edition?
Why we have the potential to see $9 corn futures in May/June 2023
USDA Recap
Comparing 2021, 2022, and 2023. What this means for corn and soybean prices.
What Pink Swan will get the funds back involved and placing bets in grain market casino
What could happen to bean meal, where is the next stop on the charts
What will Argentina weather do to soybean and soymeal prices
2 month soybean price outlook
Does history repeat itself?
Fund positions
Buy / Sell Signal
Seasonal Trades / Seasonal Spread Trades
Commodity Overview