It certainly looks like it today. With corn down 37 cents (5.63%) today. and wheat continuing the decline from the spike high of 7.70 at the end of April to the current 651.75 the air seems to be coming out of the enthusiasm balloon.
From AgWeb, May 21:
I realize I am jumping the gun by about a week, but as it stands right now, the Goldman Sachs Commodity Index is on track to close lower for the month, and this after reaching the highest point traded since November of 2014. Do keep in mind that just closing lower for the month should not strike fear into the hearts of commodity bulls, as we have done this several times during the past 13-months of advance. Still, I would point out that this is the first time it will have happened (potentially) with monthly stochastics well into the overbought zone and on the cusp of crossing lower. I would like to point out that the last time we were trading at similar levels and had indicators in a comparable position was in 2018. That year, the index initially peak in May (sound familiar?), but we really did not see a breakdown until the fall of that year. A similar situation may not be all that unrealistic for 2021.
GSCI
Looking more specifically at the grain/soy world this week, it would appear that only corn will be able to keep its head above water. If we wrapped up trade right now, nearby July futures would have gained 14-cents, and December is up 2-cents. Everywhere else, we find red ink.....
....MORE
The writer, Dan Hueber, is one of the better prognosticators/pontificators and even his gaurded optimism wasn't guarded enough. Here is his latest open access commentary.
Among the big banks it is Rabo, hands down that have the best feel for agricultural markets, unfortunately they haven't weighed in on the recent decline. We haven't had time for Goldman and their GSCI since the $200 oil call in 2008 as the gooey stuff was top-ticking at $147. If interested we have a lot of posts on the GSCI-based long-only index fund swaps they sold by the billions to the institutional crowd. (specifically designed to piggyback on Goldman's designation as a commercial so the institutions could evade speculative position limits)
Anyhoo, if interested here is the current breakdown of the GSCI weighting via S&P.At 54% energy and 19.3% agriculture it doesn't do what we wish.
One of these days we'll post and repost on index construction.
A wonderful tool should you desire solitude at a crowded party.
Finally, the S&P Dow Jones Commodity Index has weightings closer to what we are up to.
