Corn, Soybean, and Wheat Prices Need Alex Honnold to Save Them from the Cliffs of El Capitan

The daily bar chart for July corn (ZCN26) futures looks like the face of Yosemite’s El Capitan: a steep and perilous cliff. Even famed climber Alex Honnold would have second thoughts about trying to rescue the corn market from El Cap. And the winter wheat and soybean futures markets are not faring much better. What’s it going to take to fix the hemorrhaging grain futures markets? Read on.

July corn futures on Friday fell 7 cents to $4.17 1/2 and hit another contract low. For the week, July corn was down a stunning 29 1/4 cents. July soybeans (ZSN26) lost 8 cents on Friday to $11.21 1/2, hit a four-month low, and for the week were down a whopping 65 1/4 cents. July soft red winter (SRW) wheat (ZWN26) futures on Friday closed down 1 3/4 cents to $5.80 and for the week were down 30 1/2 cents. July hard red winter (HRW) wheat (KEN26) futures rose 1/2 cent to $6.20 3/4 but for the week lost 29 cents. July SRW and HRW hit seven-week lows on Friday.

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The stunning price downdrafts in the grain futures market continued, with Friday’s technically bearish weekly low closes in all the grains suggesting follow-through, chart-based selling early this week.

The grain futures markets have been caught in a price downdraft from weak long liquidation from the retail speculators and big fund players. New speculator short-selling activity also likely entered the grain markets late last week.

The strong rally in the U.S. dollar index ($DXY) late last week was also a bearish outside-market development for the grains. The USDX hit a two-month high on Friday.

The main price-bearish fundamental in the corn and soybean futures markets is generally good growing weather over much of the Midwest. “Rain makes grain,” has the grain market bears willing to continue to play the short sides in corn and soybeans. Also, recent beneficial rains in U.S. winter wheat country (especially HRW regions) have also worked to put price pressure on winter wheat markets. Weather forecasts for the Midwest for the next couple of weeks do not point to any threatening weather conditions for the young U.S. corn and soybean crops.

Relative Strength Index (RSI) technical indicator readings on the daily bar charts for the grains are presently at technically oversold levels, which coincide with near-term market bottoms being put in place over the past 12 months. Thus, a high-range daily close in a trading session would be one early clue of seller exhaustion in the grain futures. For example, July corn as of Friday’s close had gone 13 trading sessions in a row without having a daily close be close to the session high. The only day that came close was May 28, which saw July corn close just above mid-range.