Since the beginning of the new year, the grain markets have failed structurally at making new highs suggesting that there was likely a swing lower coming. There was a high probability that the soybean market would challenge $8.50 and if that level failed to find buyers, price was likely headed much lower. The job all along has been to make new lows on the continuous soybean contract.
Now that price has broken below the LML, it appears that price will be trying to make new lows below $7.91, likely on the May contract. The corn market had been pulled horizontally but has been accelerating lower as sellers continue to press price down. The most logical target for corn remains along the vector where prior swings have found buyers. The concern is that price has no structure to use with the swing last fall failing to confirm. $3.43 is the only structural area on the chart that is factual, and price appears to be headed for a retest of that area before it can find some stability.
The cattle markets have been under severe pressure with live cattle back at the bottom of the range and making new lows at $85 on the June contract. Crude oil has been pushed lower near the lows made in 2016. The job of sellers in the oil market is to make new lows below $26 with the potential for price to eventually trade down to the $10 to $15 per barrel level in the coming years. The entire commodity complex is in a large and prolonged correction. Just as the job of the crude oil market is to trade lower, the objective is the same for the grain markets. The corn market is likely going to see price trade to $3 and below, and the soybean market appears likely to trade to $7.76 and eventually target a move to $5.50 -$6. Moves to these levels will most likely require a large amount of time as price fluctuates and rarely goes in a straight line. This pullback in grains is already nearly a decade in with no sign of a bottom having been made. Once a pivot is made the next swing higher will develop. Until then, any pullback rally is going to get sold.
*The information presented is the opinion of the writer. There is an inherent risk of loss associated with trading futures and options contracts even when used for hedging purposes. Futures trading is not suitable for all investors.