Despite hot weather's persistence over much of the Corn Belt this week, rains fell and brought commodity futures down with it.
Rains that fell across the Corn Belt this week appeared to trump the persistent heat that remains across the majority of the country’s mid-section this week.
Dec. 2011 corn futures dropped 23 cents on the week, says Ashley Gulke, an analyst with The Gulke Group. She now wonders if this week’s trade has taken some of the steam out of the market.
“Technically, we saw the market trying to go up and get back where we were. With that comes a bit of fear for technical traders. Then they start to get out and creates momentum in the other direction. Then prices start to fall.”
Fundamental-wise, reports from across the country of poor crops and hot, dry weather may be a bit overblown. Rains this week in the northern plains helped to take the prices lower.
“Last week we had higher prices in anticipation of lower yields and lack of rain. In northern Illinois, we had upwards of 10 inches,” she says. “That really helped out the pollinating process.
“On the technical side of things, a lot of indicators that are used by day traders use math and momentum that looks at how fast the market is moving. When they see the momentum slowing that creates a buy signal or a sell signal. Then they get out of the market and it starts to drop.”
In the meantime, she is not ready to predict that the corn market has developed a top, but there are indications that a head-and-shoulders could have developed.