August 24, 2022
This week has offered substantial excitement in the market driven by the Pro Farmer Crop Tour. The trade seemed to be caught off guard by early yield reports from the tour, especially from South Dakota.
The media director for AgMarket Consulting, Betsy Jibben, called our office Monday morning as she started her route because some scouts were not finding any ears in the measured sixty feet of row, period. These anecdotal reports, along with the reported results from the first day of the tour, gave the markets an aggressive bid on Monday night’s open with corn futures “gapping” higher on the chart. The jump led to 30 and 40-cent gains at the high of Tuesday’s session for corn and soybeans respectively.
There are three things that are worth noting regarding the tour:
Much of the routes traveled thus far have been in what would be considered the worst parts of each respective state scouted
The routes are the same every year, so the route integrity of the tour should not be questioned
Last year's tour estimated corn yields at 177 bpa, in line with USDA's final yield of 177 bpa.
Before failing, today’s high in December corn pushed just above the 50% retracement level of the break from the $7.6625 contract high to the $5.6175 July low, while November soybeans pushed just above the 62% retracement of the $15.8475 contract high to $12.885 July low.
Further failure through today’s $6.5025 December corn low will likely lead to filling the gap left Tuesday in corn at $6.31 and a test of the 200-day moving average at $6.30. Failure through today’s $14.475 November soybean low will likely lead to retesting similar levels with the uptrend coming in near $14.00 and the 200-day moving average at $14.02.
Three-day weekend ahead
A pattern mentioned in my July blog is worth noting as Labor Day weekend approaches, especially considering gains made in the futures market this week. As shown in the charts below, the first session coming out of the three three-day-weekends so far this year have had an average decline of 25.75 cents in December corn and 47 cents in November soybeans.
When we look at the settlement heading into the long weekend to the low the second day out of the weekend, December corn has averaged 43.25 cents lower from the Friday settlement while November soybeans averaged 67 cents.
Keep an eye on livestock
I don’t usually mention, livestock, but it’s worth highlighting. December lean hogs and live cattle have seemingly moved in tandem since the inception of these contracts just over a year ago. The relationship hasn’t been perfect day-to-day, but by and large, these two contracts have tracked each other very well for the big picture moves.
The recent sharp break in Lean Hogs should serve as a stark warning for live cattle and warrants action. A picture here is truly worth a thousand words, and possibly several thousand dollars.
We are experiencing a high level of volatility in the markets currently, so as always, if you would like any assistance in marketing your crop, feel free to contact me directly at 815-665-0463 or anyone on the AgMarket.Net team at 844-4AGMRKT. We are here to help.
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The opinions of the author are not necessarily those of Farm Futures or Farm Progress.
About the Author(s)
Technical analyst, AgMarket.Net
Brian began his career in the financial services industry with expertise in insurance products, stocks, bonds, mutual funds and annuities. Brian studied technical analysis and migrated to commodities where he has built a successful career. As a technical analyst with AgMarket.Net, he utilizes prior price or volume action or trends to predict future price moves and break down agricultural balance sheets. Brian is a decorated combat veteran of Operation Iraqi Freedom as well as a member of a Gold Star Family.
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