By Elaine Kub
DTN Contributing Analyst
Back in the Middle Ages when this stuff was popular, agriculture was one of the chief topics on which occult magic was focused. On a visit to his local astrologer, wizard or "cunning woman," a person might ask about his love life's prospects. But of course, those questions would be closely followed by a request for a potion for a sick cow, or a consultation with an almanac to find when the moon phase would be most auspicious for planting grain. One astrological formula in England, for instance, promised that if the weather was wet on St. Paul's Day (June 29), then corn prices would go up that year. Basing itself on the positions of the stars, one almanac in 1614 predicted "loss and hindrance of diverse husbandmen in their beasts and cattle." Similar, more specific forecasts were made about the fortunes of individual farmers or individual crops on a regular basis.
Well, those people felt they had about as much scientific reasoning and confidence behind their predictions as we do today about our "Big Data" forecasts or whatever other market analysis techniques we might use to guess at the upcoming price levels for commodity futures. So in this season of witches and wizards and gypsies and voodoo dolls, I thought I'd give a little occult prophecy a try for the soybean market. Corn looks stuck in a not-very-mysterious price range, but soybean prices seem like they could go in any direction, depending on what the future might hold. Even the weather forecasters, with their eye on a potentially drought-bringing La Nina pattern for the South American soybean crop, can't do better than to say there's a 55% to 65% chance the pattern might show up. Or not.
Commodity markets don't have palms to read or tea leaves to interpret. But I figured I could slap down some Tarot cards for a personified soybean market as easily as any gypsy can do it for an actual person. Here's how the reading went:
A classic "Celtic Cross" pattern of Tarot cards starts out by describing the past, present, and future of the seeker, and right away I started to get creeped out by the eerie accuracy of this reading. The first card -- Death -- portrayed the soybean market as stuck in inertia and lethargy. There was one double-digit trading day two weeks ago, and there has been a general upswing in prices lately, so it may not seem like the soybean chart is as lethargic and stuck as it once was, but in historical terms, these are still quiet times. Annualized volatility in front-month soybean futures prices during 2017 has been quieter than at any time since mid-2014, and roughly half of what was experienced during 2008 and 2009. So far, so good from the Tarot cards.
The next card represents the seeker's obstacles, and in this case it was The Hanged Man -- a card traditionally associated with prophecy and divination. In other words, the soybean market's main problem is that it needs to know what's going to happen next. Well ... yeah.
As for the card showing "the past behind you," The Moon came up, representing danger. Then for "the current coming into action," (the card which we market participants are most interested in, after all) the card was The Hierophant, picturing some kind of ancient priest. It's kind of a cryptic card but is generally associated with alliances and servitude. In the context of the soybean markets, I'm going to interpret that as the market being bound to outside markets, perhaps especially to the other global edible oil markets, like palm oil, which may experience greater volatility in a La Nina year.
The last few cards advised that the soybean market beware of roguery and corruption (always good advice), with the final card, the "oracle of what will come," unfortunately being The Tower, which is the absolute worst card in the entire Tarot deck. It represents misery, distress, calamity and ruin. Does that mean $8 soybeans and financial misery for North American farmers? Or does it mean calamitous drought in South America and very high prices? Well, that's as difficult to say while wearing my market analyst hat as it is while wearing my gypsy headscarf. I will tell you, though, that I laid down a Tarot reading for the soybean market three separate times and The Tower came up in the final position every single time.
Medieval fortune tellers resembled modern-day market analysts in another key way -- they were always very careful about their disclaimers. One satirical almanac in 1664 made fun of their cautious phrasing with, "We may expect some showers or rain either this month or the next, or the next after that, or else we shall have a very dry spring." Individual fortune tellers would be quick to explain that a Tarot reading isn't meant to show any absolutely certain outcome, rather it's just meant to be a little story highlighting the seeker's circumstances and offering some potential influences for the future. Or as we say these days, opinions are subject to change at any time and past performance is not indicative of future results.
Elaine Kub is the author of "Mastering the Grain Markets: How Profits Are Really Made" and can be reached at elaine@masteringthegrainmarkets.com or on Twitter @elainekub.
(BAS/SK )
© Copyright 2017 DTN/The Progressive Farmer. All rights reserved.