December 2013 Vs December 1984…..Worthy of a Look

Tuesday, May 07, 2013

     Our goal of the AgriZone is to provide valuable market related information. This could be either fundamental or technical information. This week its all about the technical’s.
     Dale Durchholz, Senior Analyst at AgriVisor shared the following information and I felt needed to be shared with you. Some of it may be confusing so please feel free to ask questions at or on twitter @agrivisor or @agfanatics
     December 2013 corn has resistance at the late March high at 573 ¾ from a number of perspectives; it’s the last high, it’s the 38% retracement, it seems to have short term changes in direction around the 570 level, it’s the top side of a possible down trending channel, and it’s 100-day moving average is at 572.
     With this being said, there’s a plausible Elliott Wave count off the Sept high that may have been completed with the recent low. Cycle counts on Dec.(20-week) hint that may have been a key short term low as well. All suggest December should have a more lasting rally than what we have had so far. But it may be due for an interim correction that could last a couple of days, or longer. The depth of a correction would offer an insight into further upside potential, with the 62% retracement at 608 standing out, along with the prior lows just over 600.
     I’ve included a graphic of Dec 2013 overlaid on Dec 1984 to offer an added perspective (action in 2012-2013 corn prices has followed the 1983-1984 relatively well). The 62% retracement seems to “marry up” relatively well with the performance of the market that year. I also looked at the continuous December chart, and noted Dec 1984 did a 38% retracement on that price series before turning down into a low as the Dec 1984 contract expired. A similar course would see Dec 2013 moving as high as 644, again suggesting there may be potential to the 600-608 level again, maybe even a little more(but I would doubt it would be lasting)
     From a marketing perspective, anything around 570 looks like a point at which new corn should be priced(there’s no guarantee of seeing 600- and there’s an alternate Elliott count hinting all the action since the Mar 28 break has been a correction, with another break to a new low to come. But if it gets over the downtrend and the 100-day moving average, it looks like there’s a good chance of seeing CZ2013 move to 600-608, the next level that should be used for producer sales……. If 1984’s production history follows, the prices are likely to as well.

Click here to see charts