In the grain trade, the bears had Thanksgiving but will the bulls get Christmas?

There is an old market adage in the grain trade that “if the bears have Thanksgiving, the bulls will have Christmas.” In grain markets, there are no guarantees, just tendencies. That means in many years the old saying is true but there are years of exceptions. With that, the question is how 2024 will transpire with the holiday mode getting into full swing.

Over the past couple of weeks, it's pretty easy to say that the bears had the Thanksgiving holiday. Overall, grain futures are still trading near four-year lows. There is another old market adage of “the best cure for low prices is low prices.” Is this taking place to spark a Christmas rally? Arguably, yes. Export sales across all three major grains remain impressive as global demand for U.S. corn, soybeans and wheat has soared past last year’s pace and the current USDA estimates. With that, it gives the USDA an opportunity to account for strong demand in their Dec. 10 monthly reports. If printed, it wouldn’t certainly keep prices supported through the end of the year as ending stocks would likely tighten.

Historically, holiday rallies can also peak with the December USDA reports. I tend to view these USDA reports as “market tests.” Depending on the information printed, the market action following the report shows the strength of either the bears or the bulls. Most recently, the market bears have been resilient. With that, it's important to be prepared for any outcome going into the end of the year. Remember, a potential rally also depends on global weather, Fund activity and geopolitical headlines. All of which have been oddly quiet over the past couple of weeks. The growing season in South America is kicking off with improved conditions, the funds have stalled on beefing up any large long or short positions and geopolitical headlines have largely eased. That hasn’t helped market direction but there are always unknowns.

Source: AG Week