It’s nearing the moment of truth for a set of predictions about the three big grains that I’ve been following since the start of 2009.
A technical analyst named Jeffrey Kennedy called for wheat, corn and soybean prices (Chicago ones) to rise from late 2008’s lows to somewhere above where we are today (in December he expected winter wheat to get to $8-$9/bu, corn to around $5.50 and soybeans to around $12) before turning sharply south and plunging to below the 2008 lows.Â
“We will take out the December low. There’s no question in my mind about that,” he told me at the time. In his recent forecasts in his Monthly Futures Junctures newsletter he seems to have reduced the size of the counter-trend rally upwards that he predicted, but not really shortened the timeframe. His most recent charts show him picking a corn top somewhere a bit above $4, soybeans at about $11.15, and wheat between $5 and $5.50.Â
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Well, we’re about there, roughly. Corn at the CBOT on the nearby is $4.11, wheat’s at $5.66 and soybeans are at $11.25. So, is this the moment of truth for these predictions? Let’s see. If he turns out to be right, that’s great for him, but bad for anyone with or soon to be holding crop. He’s looking for corn’s expected (by him) plunge to take it near to $2.50 per bushel, soybeans to somewhere near $6 and wheat somewhere beneath $4. That’s a heck of a drop.
A lot of folks would laugh off a prediction like this, since the crop market tone right now is quite bullish. But technical analysts like Jeff revel in going against the flow and making oddball predictions, noting that it’s exactly that kind of groupthink of most folks that makes markets move in ways he finds predictable, in his case using Elliott Wave patterns.
Recently, proving he’s a fearless contrarian, he claimed that the recent calamitous plunge in CME lean hog futures wasn’t at all caused by the swine flu panic, but instead was already predicted by the Elliott Wave patterns and was set to possibly plunge regardless. Guys like him would say the market, whose mood had already shifted, went out and exaggerated the swine flu news in order to justify a massive selloff that it was going to perform anyway.Â
Sure enough, his April prediction chart of April 17 shows a fairly sharp drop-off in lean hogs, although the extent of the fall has been far surpassed by the subsequent real world market. He may have gotten the extent wrong, but he’s got the direction right, so I suspect he’d be feeling pretty good right now.Â
Let’s hope he’s dead wrong about crop price direction, though . . .
