Free Commentary

By: Dan Hueber –

Unless a commodity magician shows up and pulls some type of shocking trick from his top hat that can amaze us all, it would appear that this will have been a dour week for the Chicago grain and soy markets.  If we were to finish right now, December corn will have lost 21-cents and returned to the longer-term base of support, November beans are currently trading right at 35-cents lower and appear set to post an outside lower weekly reversal and even Chicago July wheat, which reached up to the highest point since April earlier in the week, are at this moment down a few cents since last Friday. (Do note that Minneapolis wheat is up 6-cents and potentially will record the highest close since June 2014). We often associate this time of year with exciting and volatile corn and bean markets, and dull wheat trade by the way, but this year they have been anything but.  What will it require to change that situation?  We all know the answer to that question, which is of course a turn for the worse in weather and in the case of wheat, a worsening weather situation. The short-term morning forecasts are calling for cooler and moist conditions for much of the growing region next week so I have to suspect, these markets will continue to struggle through the balance of the month.

By no means has it just been the grain and soy markets that had a tough go of it recently as commodity markets as a whole have been experiencing consistent selling pressure.  Actually, the CRB index, which began the year on an optimistic note has been back pedaling ever since and this week has pressed down to the lowest level since April of last year.  The 24% correction in crude oil has of course had a significant impact on this market but it stands to reason that if a rising tide lifts all boats, the opposite can be expected when it is receding.  By no means has this index shown us any sign of halting the decent, but the past couple weeks have taken on the complexion of a market in the final throws of a down swing and once again we have weekly technical indicators residing in the oversold zone and turned sideways.  This would appear to be nothing more than a B wave correction from the initial rally off of a cycle low and now that we reached into good retracement targets, I expect to see value buyers return once again.