Prospects are not looking good for the idea of December providing the spark for a “breakout” higher in grain prices.
At the start of this month, Bloomberg Intelligence said that “agriculture prices face a key test in December”, after “recovering slightly from US harvest pressure in November”.
The test ran so.
“If the Bloomberg [Bcom] agriculture spot index can sustain a gain in the last month of 2017, it would be the first December gain since 2011 and indicate a potential longer-term bottom” for prices.
“If not, the trend is likely to remain the same, with prices drifting lower on rapidly increasing supply.”
‘Talk about the old days’
The prize for bulls is a substantial one.
“A two-decade extreme narrow trading range in the grains indicates a potential breakout soon, historically favouring higher prices,” Bloomberg Intelligence said.
However, with one-third of the month gone, bears are most definitely in the ascendancy.
The Bcom ag index in early deals on Monday touched 47.3898 – falling below 47.5 for the first time on records going back to 1991.
And some investors see much to be gleaned from the experience of times gone by.
“Some talk about the old days and how low volatility, highly supplied markets trade,” said US broker Benson Quinn Commodities.