Here's a quick view of CORN vs CRUDE which has been moving together for the past ten years with some variation.
With CRUDE pushing highs here (Price Inflation fears rampant) and CORN pushing new lows (Food Deflation - no fears about falling corn prices in the news warning about falling inflation), it seems obvious to put up a chart showing how these two markets are set up at the moment.
CORN and CRUDE have moved to an extreme and with CORN pointing lower I am seeing that there is a trade setting up.
In the past, I was constructive on CORN and was looking for corn to catch UP to crude oil, but that didn't materialize like it did in the 1970's with a 4-fold advance. The monetary inflation we have had in both cycles would have supported much higher corn prices.
However, here we are. Corn has fallen to lows going back more than a year, but the obvious story is that crude oil is making 52-week highs. Side note: You can also see that crude oil is down 7% from 2012 or 11 years ago. This is NOMINALLY as well. Inflation has been substantial for the last 11 years and may be 40% or 50%.
Also note that corn is down 45% from 11 years ago "NOMINALLY". After inflation, corn prices are down 60% or more.
So, this trade sets up within the near future and you could put both sides on: long corn, short crude. Or you can take sell signals only on all technical setups for crude on the daily chart. I would suggest do a little of both and have 5 different definitions of "technical trend" to follow. The simplest is "sell a 5-day new low" and use a stop over the 5-day high.
Thank you for sharing your analysis of the relationship between corn and crude oil prices. It's interesting to see how these two commodities have moved in relation to each other over the years and how inflation plays a significant role in their nominal prices.
bilhas86
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OIL is due a retest at 66USD, is coming weeks. the bubbe has busted. the demand circle is exhausted and oil will be back to 60USD. US and EU is pushing hard to stop Saudi and OPEC dominance.