Corn’s 2024 rally was a “fundamental” flop. But it was an Elliott wave success. Get ready cuz the price plot is set to thicken… again.
Today, we jump into our virtual time machine and go back to late February, to the land of the world’s most heavily traded commodity crop: corn.
Not to be corny, but the situation for corn farmers at the time shucked. Shucked hard. Corn prices had just suffered their steepest decline in 10 years, pushing the grain to its lowest level in 3 years.
The reason for the selloff was, for all “fundamental” purposes, clear: Record-large harvests combined with increasing competition led to the “most ever corn in storage bins for U.S. growers to date.” (Reuters, Feb. 22).
This February 22 Reuters captures the dire mood of the time:
Farmers across the United States are kicking themselves for putting off corn sales after fields dried up in May and June, fueling expectations for higher prices and smaller harvests. Instead, prices tanked as rains saved the crop. The size and speed of the price collapse stung farmers and left their storage bins stuffed with record amounts of corn.
“I kept thinking the market would go up,” [remarked one corn farmer]. “I’ll just give up eventually and start selling if nothing happens.”
“This year, every fork in the road has been bearish.”
There was no arguing with the “fundamental” math. A record supply of corn in silos was bearish. Plain and simple.
But from an Elliott wave perspective, the future of corn depended on more than supply figures. The ultimate driver of the grain’s price trend was investor psychology, which unfolded as Elliott wave patterns directly on the market’s chart.
With that said, on February 23 — one day after the bearish corn supply bomb dropped — our Commodity Pro Service began to rein in — NOT ramp up — its bearish expectations for the grain. We wrote:
It seems a bit of the stretch [for prices to reach the 380] level given the market is currently trading at 413 and is well along in wave 5 of 3. But you just never know. And that’s why I’m a big advocate of following the trend to the end of the line. Until the market offers evidence that this decline is complete, even though we think it’s probably mature based on the daily count… we’ll continue with the bearish view going forward.
When trading resumed the following Monday on Feb. 26, corn rallied hard. And, the evidence we needed for a bottom had been met. On February 26, Commodity Pro Service set the stage for a powerful rally with this labeled price chart and analysis:
If wave (3) ended at today’s low, the upcoming [rally] could reach the area of the fourth wave of one lesser degree to 463. We’re watching for additional evidence that the turn higher has occurred.
From there, corn prices took off running. They rallied to their highest level for 2024 on May 7 before catching breath. On May 7 and 8, Commodity Pro Service considered the possibility that wave 4 was complete, and a significant bearish reversal was underway.
As prices swung down and then up, on May 9, Commodity Pro Service showed this chart to clarify the next course of corn’s action. If wave 4 ended, and a first and second wave were underway, then wave 2 must “end no higher than 471 ½.” This was the critical line in the sand to maintain an immediately bearish outlook, as wave 2 may never move beyond the start of wave 1.
In the days following, corn prices did exceed resistance, eliminating the near-term bearish count. The grain made another push, reaching a new 2024 high on May 14 before reversing course again.
Now, on May 17, Commodity Pro Service presents a newly updated wave count for corn and reveals exactly what prices must do to “align with the idea that wave 5 is underway.”
Commodities Sing a Song of Opportunity
When it comes to knowing the future of commodity prices, there’s no such thing as a silver bullet. Even the most jarring Black Swan events like that of the pandemic can’t accurately determine where prices will go.
The only confident measure of a market’s trend is investor psychology, which unfolds as Elliott wave patterns directly on price charts.
In this case study our example was corn, but the Wave Principle can be applied to any market. If you follow commodities, our Commodity Pro Service gives you up-to-the-hour, daily, and weekly analysis of the most promising set-ups underway in the world’s leading grains, livestock, softs, and more.
If you follow commodities but you don’t need intraday coverage, Jim is also the editor of our Commodity Junctures service, which gives you weekly and monthly updates.
If you just want to learn more about the power of Elliott that can be applied to the markets you follow, check out our Club EWI now.