Today I’ve been looking at a couple of market outlooks that have opposite views.
The happier one for farmers comes from Joe Victor of Allendale, Inc., an American market agricultural market analysis firm. Allendale doesn’t have much doubt a summer rally’s coming.
“Sure,” he said when I asked about it, showing no sign of doubt that he expects a rally to occur sometime in July. Lots of reasons for a rally, he and his colleagues, who are primarily supply and demand analysts, think, especially looking at all the crop production problems already plaguing farmers in the eastern corn belt, the Red River valley and in the Canadian west. Damage to crops from the rotten conditions in many places will probably soon come to light and provide the almost-annual summer rally.
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“The party’s over for grains,” he concludes at the end of his analysis in this month’s Monthly Futures Junctures, which came out today.
Since late last year he’s been predicting a recovery from the late-2008 lows like we experienced up until the beginning of June, then a return to the 2008 lows and probably lower.
Soybeans went higher than he thought they would. He’d predicted $11.14 as a likely peak, not over $12. Corn and wheat were within rough ranges he’d been working with. The shape of the rally was about what he was looking for, although the actual prices reached were a bit out.
Kennedy is now calling for all three big grains to slump, with the clearest dangers coming to corn and wheat. All of this is based on his application of Elliott Wave principle, his technical template.
Soybeans are the biggest question to him and he’s still looking for confirmation that the oilseed has turned down. Eventually it’ll go down to under $8 per bushel this year. Corn he expects to drop to below $3 per bushel, and wheat to below $3.50.
That wouldn’t be great for the prices Canadian farmers get for their grains. However, there’s one little silver lining to this cloud: his outfit is predicting a big rally in the U.S. dollar. If the greenback rises against the loonie, a good portion of the apparent crop price loss would be offset in Canadian dollar terms.
So like the weather and crop production conditions out there, the market outlook is unclear. When it does clear let’s hope Joe’s right and Jeff’s wrong.
