To begin with, I still see a major (long-term) 5-wave uptrend on this monthly chart for the cmdty National Corn Price Index (NCPI, weighted national average cash price). Recall from previous discussions that I view the NCPI, as well as the other cmdty National Price Indexes, as the intrinsic value of the market* meaning its strength or weakness is a direct indication of the strength or weakness of the corn market as a whole.
Back to the long-term technical outlook of corn: As August came to a close, the NCPI was priced at $3.2775, up $0.3669 from the July settlement of $2.9106. Also note the NCPI posted an outside price range, meaning its August high and low was above and below the July high and low. This combined with the higher monthly close means the monthly pattern was a bullish outside range. However, as all the infomercials like to say, “But wait, there’s more!”
As I mentioned in the open, the NCPI is in a major 5-wave uptrend that started with the low from the previous 3-wave downtrend of $2.7265 posted during April 2020 (Wave C). The beginning of this new 5-wave pattern is compact, with the peak of Wave 1 July’s high of $3.3018 that led immediately to the Wave 2 bottom with the August low of $2.8122. The subsequent August rally (recall it moved beyond the July high and closed higher for the month) confirmed the NCPI is in Wave 3 with the initial upside target sitting near $3.39. This price marks the 38.2% retracement level of the previous 3-wave downtrend from the high of $4.4616 (July 2019) through the April 2020 low. Given the neutral reading of the cmdty National Corn Basis Index (NCBI, weighted national average), I would expect this 5-wave pattern to eventually test the 50% to 61.8% retracement area of $3.59 to $3.80.
As for timing, the previous two Wave 5s have peaked in May 2014 and July 2019. Again, though, the major patterns are occurring over a shorter period of time, so my thought is the next Wave 5 will occur well before 5 years have passed, meaning before July 2024.
*I use these indexes for a number of key studies, including the recently posted Real Supply and Demand tables. It’s interesting to see other analysts are coming around to USDA’s flawed corn numbers, something my analysis of the NCPI has been saying for years.