Over the last two months, corn prices have been about as perky as a pallbearer. From its early June high, the grain has plunged nearly 10% to land at a fresh contract low. The chart below offers a visual illustration of the downtrend:
It goes without saying that knowing beforehand that corn was set to take a flying leap off a steep cliff would have been preferable to watching the post-recorded account. (See: Early July Wall Street Journal article: "Corn Traders Cry, 'Get Me Out Of Here.'")
Well, in the June 2009 Monthly Futures Junctures, Elliott Wave International's chief commodity analyst and Futures Junctures Service editor Jeffrey Kennedy provided exactly that; namely, objective insight into corn's impending reversal.
In that publication, Jeffrey opened with a special, expanded "Monthly Feature" segment on grains with this leading headline: "The Party's Over"
At the time, corn prices were orbiting their highest level in eight months and the mainstream experts saw a "perfect bullish storm" brewing in the grain's backdrop; the most influential factor being an ongoing rally in crude oil. For them, high oil prices increased the demand for cheaper, alternative fuels such as corn-based ethanol.
The June 2009 Monthly Futures Junctures (MFJ), however, came to a very different conclusion.
Despite rallying oil and "adverse" weather conditions and any other potentially bullish "fundamental" on corn's horizon -- the June MFJ went on high, bearish alert to the grain's long-term future. There, Jeffrey presented the following close-up of corn prices alongside this compelling insight:
"The corrective advance in corn that began in December 2008 is complete. This means that the stage is set for renewed selling that should push corn prices to below the 2008 low of 325 ¼. Wave patterns argue strongly that this is an intermediate tradable top."
The powerful sell-off to "below the 2008 low" since then speaks for itself.
So -- is the grain's pain finally over? In the August 13 Daily Futures Junctures, Jeffrey Kennedy visits the short side of corn to reveal where prices may be in the weeks ahead. Jeffrey then covers the long-side of the market in the latest Monthly Futures Junctures "Wave Watch" section.