Weekly Playbook (W/C 2026-07-27)

Recap

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It was clearly a big mistake to jump into a commodity only because its chart “looked attractive”. If I had followed the plan, I would have been stopped out in less than ten minutes. Nevertheless, it was a good opportunity to learn about corn, and last week turned out to be a good window to observe fear in the markets.

Observations

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Why was corn so weak?

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From what I could find, the fall in corn prices could be attributed to the following factors:

• Typhoon Bavi’s impact on the corn fields in Northeast China turned out to be minimal, so bullish expectations failed to materialize.
• The demand for corn is at a low:
  • the largest downstream sector for corn, pig farming, is experiencing historic losses. Thus, the pig farming industry is undergoing capacity reduction, leading to lower demand for corn;
  • the second largest downstream sector, the corn deep processing industry, was said to be undergoing maintenance shutdowns;
  • the substitution wheat’s price was also quite low, and Sinograin released more grain into the market than it procured.

Why was corn outside of China so strong?

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This is mainly because China’s corn market is isolated.

Actually there is another piece of news this week saying that Argentina’s corn entered the Chinese market for the first time in over ten years. However, the amount only accounts for a tiny fraction of China’s total corn supply. Therefore, the news had little impact on the market.

Corn prices outside China were strong because of extreme weather.

Why was soybean meal so strong?

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It’s natural to wonder why soybean meal was so strong, given that both corn and soybean meal are animal feeds.

It’s important to note that soybean meal and corn are generally not substitutes: soybean meal provides protein, while corn provides energy.

More importantly, China’s soybean supply depends heavily on the international market. Due to weather concerns, CBOT soybean meal futures have been rising very rapidly, which directly pushed up domestic soybean meal futures.

Fear

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From what I could find, a recurring theme last week was fear. Many corn merchants were said to have bought corn at high prices. Now, with the hot and wet weather causing corn to spoil, combined with the concentrated maturity of third-party funding, the fall in corn prices triggered fear among the merchants, leading to a free fall in corn prices.

Plan

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