Grains and the $

While US stocks continue to grind higher (as expected; see last edition) and other equity markets also remain quiet, there are a few developments to report in other markets:

Grains have been diverging one from another in the last few months with Corn weakening, Wheat trading mostly sideways but gradually falling, the Soya complex also split with Meal weak, Oil firmer and Beans range-trading just under $9. Cotton (the honorary grain, as it competes for acreage) has meanwhile been firming for four months, after a weak spell during the first Covid panic.

Now there are compressions at a weekly scale in Soybeans and Wheat and a single daily-scale bottom extension in Corn, some time after a weekly-scale version. Soy and Wheat first, where it is important to note that neither compression has yet broken (the week is not over for another 2 sessions):

These two are both a bit weak as of the close of Wednesday (today) but we cannot say that a break has occurred until these prices close out the week outside the range of these compression signals. Corn now:

This looks quite bullish. The main drop ended in Spring with those two weekly-scale bottom extensions. That led to a sideways period that we think was most likely to have been ‘bumping along the bottom’, as the market readied for a possible rally. That rally has now become more likely (and imminent) as the most recent drop during July has now produced a daily-scale bottom extension too. Buy it.

Elsewhere, the US$ has been weak for about a year and has now extended. We would cover any shorts you may have and reverse into a long position. This latest extension, shown with the others in the chart is matched by similar signals in the $ vs the Swiss and Euro which we don’t show here but signals in currencies have worked particularly well for the last couple of years. Buy the $. There are obvious implications for those markets that are strongly influenced by the $, which we will analyse separately, soon.