The Barchart National Corn Price Index (NCPI, weighted national average cash price) posted a bearish outside range during June, a move that completed a double-top reversal pattern on its long-term monthly chart. This fits the idea the NCPI has moved into a major (long-term) downtrend signaled by the bearish crossover by monthly stochastics above 80% at the end of May. Confirmation of a major top would be a move below the previous 4-month low of $6.8770, with the NCPI calculated last Friday (July 1) at $7.0525. The bottom line is the cash market looks to have established a major top, and with that the intrinsic value of corn in general has topped. The initial downside target is near $6.0175, the 38.2% retracement level of the previous major uptrend from $2.7265 (April 2020) through the high of $8.0515 (April 2022). Is corn still fundamentally bullish long-term? Yes. But even a fundamentally bullish market can see a downtrend of 38.2% to 50% (near $5.40) before buying interest returns.
New-crop December Corn: The 2022 contract followed through on May’s bearish spike reversal and extended its new major (long-term) downtrend to a low of $6.1875 during June. This put Dec corn within sight of the initial downside target of $5.9575, the 38.2% retracement level of the previous uptrend from $3.20 (August 2020) through the May 2022 high of $7.6625. Keep in mind May also saw monthly stochastics establish a bearish crossover above the oversold level of 80%. It’s interesting to note last Friday, July 1, saw the Dec22 contract equal its previous 4-month low of $6.0425. A move below that mark in July would: 1) Confirm a new major downtrend, and 2) put a downside technical target at $4.4225, below the 61.8% retracement level. Keep in mind the 2023 issue closed last Friday at $5.7675, 30.75 cents under the Dec22 contract.
The Barchart National Soybean Price Index (NSPI, intrinsic value of the market) completed a bearish key reversal on its monthly chart during June, putting a peak on the previous 5-wave major (long-term) uptrend and confirming a new major downtrend was in place. Initial support is at the previous 4-month low near $15.1950 with the NSPI calculated at $15.3637 last Friday (July 1). Given long0term fundamentals remain bullish, the NSPI (the intrinsic value of the soybean market) could find support at the 38.2% retracement level near $13.4150. The 50% retracement level is down near $12.20.
New-crop November Soybeans: The November 2022 contract completed a bearish key reversal on its continuous monthly chart during June, confirming the market has moved into a new major (long-term) downtrend. This was immediately followed by a move below the previous 4-month low of $13.94 (April 2022) on Friday, July 1, setting the stage for continued pressure this month. The initial downside target is near $12.8975, the 38.2% retracement level of the previous uptrend from the double bottom near $8.1225 (September 2018 and May 2019) through the June 2022 high of $15.8475. The November 2023 contract close last Friday at $12.99, still a good price based on historic distribution analysis.
