GRAIN MARKETS REACH MULTI-YEAR HIGHS -- CRB INDEX TESTS TRENDLINE RESISTANCE -- A LONGER-TERM LOOK AT COMMODITY PRICES

GRAIN MARKETS ARE IN NEW UPTRENDS... Higher commodity markets are starting to attract more attention because of the potential for higher inflation.   Past messages have written about new uptrends in energy markets or industrial commodities like copper.   Some of the biggest gains, however, are being seen in agricultural markets, and grains in particular.   The weekly bars in Chart 1 show the price of corn rising to the highest level in more than five years.  Chart 2 shows soybeans doing the same.   Chart 3 shows the price of wheat also in a multi-year uptrend.  Dry weather conditions around the globe are helping to push agricultural prices higher.   That includes markets like cotton and sugar which have also reached multi-year highs.  Those gains are helping to boost the entire commodity complex.

CRB INDEX TESTS FALLING TRENDLINE... The daily bars in Chart 4 show the Reuter/Jefferies CRB Index trading at the highest level since the first quarter of last year and testing a falling trendline drawn over its 2018/2020 highs.   A move above that resistance line would increase the odds for even higher commodity prices.

A LONGER-TERM COMMODITY VIEW...The monthly bars in Chart 5 show how far commodity prices have fallen over the last decade.   And also puts the current rise in better perspective.    Based on that chart, the real test of the CRB uptrend would take place closer to the 200 level which includes a test of its 2018 highs combined with long-term trendline resistance (see circle).   The commodity rise over the past year, however, has been the strongest in a decade and increases the odds that a new uptrend may be starting.   There's a lot riding on that.   Commodity prices are leading indicators of inflation; and play a big role in the direction of interest rates and Fed policy.