Dec Wheat - Steady to 1 Lower
Dec Corn - 1 Higher
Nov Beans - 1 to 2 Lower
As we approach first notice day for September Corn, open interest is declining rapidly, therefore, most of the mass exodus of contracts is from the September contract. Open interest is the total number of positions traders are holding from 1 day to the next.
There has been a decline of about 80,000 contracts in corn in the last 3 days - heavy volume again today.
Next, we have end of the month and quarter on Friday. Add these 3 factors together and you have much of the reason for December Corn continuing to sell off. Admittedly, I was not considering these factors yesterday.
However, there has been no technical damage to the chart. I will admit, it is very sloppy, but corn is still in the uptrend which began on August 15th. Elliot-wise, no rules have been broken and we should be completing small correction #2, within a bigger wave 3 that is in progress.
Next Tuesday is the first business day of the new quarter and month, and I believe chart conditions will change, maybe drastically. Looking at the daily and weekly continuation corn charts, you see quite a pinch point down there where a significant amount of potential (vs. kinetic) energy has built up.
Corn could trade down to 477 and not break support for the wave, but I doubt it. There is a swing low to the left that was tested today which is labeled "this low" on the corn chart. You will also see the lower uptrending blue line below on the 2 hour December Corn chart.
Here is the daily continuation corn chart for reference.
November Soybeans almost made it down to the 1379 level today, but fund buyers stepped in a few ticks ahead of this price. Remember, this phenomena is called frontrunning - funds stepping in front of the smaller limit buy orders resting below.
This keeps the other traders out of the bean market for now, who will want to jump in at higher prices - once a more clear upleg has begun. These new traders will also contribute to the up trend by jumping on the moving train.
The only other thing I can say here is that Friday's close should be higher than today's close. Check out today's 2 hour November Beans. The 2 uptrending lines below price shows us that the chart has been accelerating since the low because the upper line is at a steeper angle.
The more we can quantify factors that affect the grains, the closer to the truth we can get. The most analogous year to this growing season which comes to mind is the 2011 growing season that experienced a dry August. I compared the May to September yields from 2011, taken from the USDA reports.
The yield decreased from 158.7 down to 148.1, on the September report, in 2011. This equals a 6.7 % decline in yield. When you multiply 6.7% with this years beginning yield (181.5), you get 169.4. That is interesting, but I can't say for certain if this year is better or worse than 2011 at this point.
Comparing the current drought monitor with August 23rd 2011, today is quite a bit worse. https://droughtmonitor.unl.edu/Maps/MapArchive.aspx
The other factor we can compare is rainfall. I will post the August precipitation, and compare it to the August 2011 rainfall this weekend, but for now, we have the last 2 weeks of rain as a percentage of historical averages.
The last 2 weeks has more red coverage than this same map did last weekend, because there isn't much rain going on this week.
Lastly, the 8-14 day forecast is trending hotter than normal - it runs out to September 13th. https://www.cpc.ncep.noaa.gov/products/predictions/814day/index.php