The Barchart National Corn Price Index (NCPI, weighted national average cash price) consolidated during August before closing at $7.1363, up 14.75 cents for the month. The major (long-term) trend remains down after the NCPI completed a bearish 2-month reversal at the end of June. While the index is expected to see a Wave B (second wave) rally at some point this fall, it is not expected to take out the May high of $8.0515. The initial downside target is $6.0174, the 38.2% retracement level of the previous major uptrend from $2.7265 (April 2020) through the May 2022 high. Given monthly stochastics are well above the oversold level of 20% the NCPI could fall to the 50% retracement of $5.3890 eventually.
New-crop December Corn: The 2022 contract looks to be in Wave B (second wave) of its 3-wave downtrend after posting a high of $6.8375 during August. This was just short of its projected target of $6.8875, the 61.8% retracement level of Wave A (first wave) from the May high of $7.6625 through the July low of $5.6350. I’m still expecting Wave B to extend into October based on the market’s long-term bullish fundamentals. If Dec22 is able to close higher for September and October, it would complete a Benjamin Franklin Fish Similarity scenario and likely trigger renewed selling interest. I’m not expecting Dec22 to take out the long-term high unless something changes dramatically. At the end of August the Dec22-Dec23 spread was at an inverse of 50.25 cents.
The Barchart National Soybean Price Index (NSPI, intrinsic value of the market) extended its major downtrend to a los of $14.0906 during August. The initial downside target is $13.4153, the 38.2% retirement level of the previous uptrend from $7.0697 (May 2019) through the high of $17.3377 (June 2022). Monthly stochastics remain bearish and well above the oversold level of 20% indicating there is plenty of time and space for the NSPI to move lower, despite continued bullish fundamentals indicated by the weak carry in soybean futures spreads.
New-crop November Soybeans: The November 2022 contract isn’t showing me much on the continuous monthly chart, with the issue consolidating within the July range during August. The continuous monthly chart continues to show a major downtrend, based on the bearish key reversal posted during June. Granted, this was immediately followed with bullish spike reversal during July. While long-term fundamentals are bullish, I still like having plenty of 2022 expected production covered until we see a clearer bullish reversal pattern. Also, the trend of the NSPI remains down meaning futures could be pressure by cash.