Algorithm buying continued to drive the Grains sector higher last week, confirming what we knew by watching trends.
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The corn market saw what looks to be a record one-week addition to its net-long futures position, despite market fundamentals remaining unchanged.
Don’t Miss a Day: From crude oil to coffee, sign up free for Barchart’s best-in-class commodity analysis. Soybeans continued to see big buying as well, with some spillover activity from the smaller soybean oil market likely.
Just over a year ago I wrote about how classic technical analysis (patterns, trendlines, etc.) has become obsolete due to the fact the algorithms creating trends don’t pay attention to such things. More recently, I posted a piece talking about how reads on real market fundamentals (intrinsic value, basis, futures spreads, forward curves) are largely ignored by Watson these days as well. What drives the algorithms, which in turn control trends? From the technical side it is a combination of momentum and volatility indicators, while fundamentally, unfortunately, it comes down to key words strategically placed in “news” headlines or social media posts, neither of which have to be the “Truth”, or highlighted numbers in government reports.
