Could the high be near?
WATSEKA – While many factors are impacting the markets, Merrill Crowley with First Choice Commodities has some concerns about recent higher moves.
The Commitment of Traders chart shows the funds extremely long and the commercials extremely low, or short, for both corn and soybeans.
“When these charts reach these extreme levels, it’s a warning sign to tell us the high is near,” Crowley told The Central Illinois Farm Network on Thursday.
Technical patterns Crowley studies suggest we are in the final wave higher before the market rally ends. He is not saying it is going to end completely, but at least temporarily.
“Farmers are wanting to re-own and are continuing to ask if now is the time to buy,” said Crowley. “This also usually occurs near market tops.”
On the other side of the coin, sources have said U.S. farmers sold 70 to 80 percent of this year’s soybean crop. Brazilian farmers are reported to have sold at least 50 percent of their 2021 crop. Crowley notes La Nina is active which suggests dryness for southern Brazil and Argentina.
Crowley sees similarities between this year and 1995-96 when we had a record crop and Chinese buying pushed soybean prices higher. The rally started in 1995 and corn prices went higher as well.
“No two years are alike but this kind of reminds me of it to some extent.”
This is a demand market, according to Crowley. A demand market usually ends when the demand goes away which is when prices tend to drop quickly. Crowley urges producers to not wait until these prices disappear to make sales.