Corn prices rallied for a month, but that came to end in the last week as corn futures may be resuming their longer-term downtrend.
- After moving above $4 a bushel, corn futures made a clear moving average crossover to the downside when VantagePoint’s predicted medium-term moving average (blue line) dropped below the actual medium-term moving average (black line). VantagePoint crossovers have been good signals of trend changes, as the chart illustrates.
- Other VantagePoint indicators support a shift to a downtrend with the predicted neural index (gray line) now at 0.00, a bearish reading, and the predicted moving average differences (red and green lines) pointing down, indicating weakening momentum for the uptrend even as prices rose.
- Fundamentally, the U.S. Department of Agriculture put a dagger in the uptrend Monday with its final 2008 crop estimate that was more than 80 million bushels higher and lower usage estimates that raised the carryover estimate by more than 300 million bushels.
- This is the time of the year for the “February break,” a seasonal pattern that often brings lower prices for grains and soybeans.
- The value of the U.S. dollar appears to be moving up again. Corn prices tend to move in the opposite direction of the dollar so a stronger dollar would likely mean a resumption of the corn downtrend.
