Is Corn Price on the Edge of a 25% Drop?
Updated
In this idea, I am trying to read and forecast the behavior of the chart in the next 4.5 months. I do not follow corn production, harvest, demand, etc.
Since April 2022 (its 9-year highs) has lost about 40%. Its relatively long-going bearish trend means that most of the drop likely has happened.
Let's quickly study previous drops that lasted more than a year and erased more than 40% of the corn price.
The last one started 11 years ago. It happened during world economic growth. The price lost more than 61% for 26 months of the trend.
Another drop occurred during the GFC and lasted for 24 months. Corn lost 60.5% of its price. Important to note that the price reached its lowest point in December 2008 (in the sixth month after the drop started), then the price fluctuated and reached about the same level in September 2009. Considering the crisis and its trend low reached in 6 months, it is not the perfect example to compare with the current 2022-2023 corn price trend.
Let's continue to delve into the past! 44% tumble was printed between April 2004 and November 2005, i.e. 19 months.
Sending back 17 years ago, we can see a 64.4 % drop in 25 months.
Here we are in 1983, the era of high dollar inflation (and not only). The Fed chair Volcker Jr. is fighting with inflation
USIRYY , and America is recovering from its 1979-1982 recession. The world economy is starting to recover from recession/slowdown too.
Between late August 1983 and February 1987 (43 months), corn prices fell by 61.9%.
These data series are not enough to firmly generalize bearish trends. Besides, price movements in the past do not determine possible future patterns.
We can gently conclude that a bearish trend in corn prices that lasts more than a year could last between 19 and 43 months and show a drop between 40 and 64.4%.
In view of those facts and the performance of the corn daily prices in the last 1.5 months,
I forecast several scenarios.
In the first one, I expect that the price would break the 469-470 support zone and come to 400 cents per bushel until the end of September.
Then I expect some correction lasting 3-5 weeks. And the realization of scenario #1.5 (continuation of scenario #1), we could see a breakout of 400 cents and move to 345 cents per bushel before the end of the year. That would be the low or almost the low of the current long-term bearish trend for maze price. Combined scenarios #1 and #1.5 would mean minus 25% from the current price and a drop of 57.5% since April 2022.
There are two alternatives. In scenario #2 after reaching 400 cents, the price would return to 470 cents.
In scenario #3 the current support zone would be a minimum of the trend for the next 4.5 months.
Since April 2022 (its 9-year highs) has lost about 40%. Its relatively long-going bearish trend means that most of the drop likely has happened.
Let's quickly study previous drops that lasted more than a year and erased more than 40% of the corn price.
The last one started 11 years ago. It happened during world economic growth. The price lost more than 61% for 26 months of the trend.
Another drop occurred during the GFC and lasted for 24 months. Corn lost 60.5% of its price. Important to note that the price reached its lowest point in December 2008 (in the sixth month after the drop started), then the price fluctuated and reached about the same level in September 2009. Considering the crisis and its trend low reached in 6 months, it is not the perfect example to compare with the current 2022-2023 corn price trend.
Let's continue to delve into the past! 44% tumble was printed between April 2004 and November 2005, i.e. 19 months.
Sending back 17 years ago, we can see a 64.4 % drop in 25 months.
Here we are in 1983, the era of high dollar inflation (and not only). The Fed chair Volcker Jr. is fighting with inflation
USIRYY , and America is recovering from its 1979-1982 recession. The world economy is starting to recover from recession/slowdown too.Between late August 1983 and February 1987 (43 months), corn prices fell by 61.9%.
These data series are not enough to firmly generalize bearish trends. Besides, price movements in the past do not determine possible future patterns.
We can gently conclude that a bearish trend in corn prices that lasts more than a year could last between 19 and 43 months and show a drop between 40 and 64.4%.
In view of those facts and the performance of the corn daily prices in the last 1.5 months,
I forecast several scenarios.
In the first one, I expect that the price would break the 469-470 support zone and come to 400 cents per bushel until the end of September.
Then I expect some correction lasting 3-5 weeks. And the realization of scenario #1.5 (continuation of scenario #1), we could see a breakout of 400 cents and move to 345 cents per bushel before the end of the year. That would be the low or almost the low of the current long-term bearish trend for maze price. Combined scenarios #1 and #1.5 would mean minus 25% from the current price and a drop of 57.5% since April 2022.
There are two alternatives. In scenario #2 after reaching 400 cents, the price would return to 470 cents.
In scenario #3 the current support zone would be a minimum of the trend for the next 4.5 months.
Comment
Yesterday the price broke the support zone, but today it returned to 469-470. The next days would show if it was a true breakout or a false one.Comment
The last days showed that it was the failed breakoutComment
Throughout the week the price continued floating the 469-470 support zone.
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