Corn Prices Consolidate Within Downtrend
Eric De Groot | Nov 15, 2015 01:03AM ET
The cycle of accumulation and distribution defines a decline within cause for corn.
America's farmers are harvesting huge amounts of corn and soybeans, according to the U.S. Department of Agriculture (USDA). The numbers, if realized, are expected to reach 13.6 and 3.89 billion bushels of corn and soybeans. These impressive numbers, the third and second largest crops on record according to the USDA, represent huge supply injection into markets struggling to simply maintain cause building since 2008.
Building distribution (falling DI and CAP trends) as price consolidates within a downtrend reflects the anticipation of lower corn and soybeans prices after the near-record harvests. America's farmers should be prepared for this outcome.
Price
A negative long-term trend oscillator (LTCO) defines a down impulse from 42.77 to 21.75 since the fifth week of December 2012 (chart 1). The bears control the trend until reversed by a bullish crossover. Compression (white circles) generally anticipates this change.
A close above 34.92 jumps the creek and transitions the trend from cause to mark up. Last week's close below 22.23 maintains the decline within cause. A close below 14.24 breaks the ice and transitions the trend from cause to mark down.
Chart 1
Leverage
A negative long-term leverage oscillator (LTLO) defines a down impulse and bull phase since the second week of July (chart 2). The bull phase, a conflicting message from the leadership of leverage and price, tightens risk management for the bears (see price).
A diffusion index (DI) of -30% defines growing Q3 distribution (chart 3). A capitulation index (CAP) of -4% supports this message (chart 4). DI and CAP's trends, broader flows of leverage and sentiment from extreme distribution (red dotted line) to accumulation and extreme complacency (red dotted line) to fear supporting the bears (green arrows), should not only continue to extreme concentrations but also restrain upside expectations until reversed (see price).
Chart 2
Get The News You Want
Chart 3
Chart 4
Time/Cycle
The 5-year seasonal cycle defines weakness until the third week of December (chart 5). This path of least resistance restrains upside expectations (see price).
Chart 5
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.