Precious metals traders know the past few months their markets have been in the spotlight as gold prices in April reached a record high and silver prices a three-year high. Longer-term price uptrends are still firmly in place in the gold and silver markets but prices have backed down from their highs. While there may well be still more price upside for gold and silver in the coming months, the bull-market runs have now become mature. The bullish gold and silver trains have already left their stations and traders and investors climbing on board now know that risks of big downside corrections are higher, including the risks of market tops already being in place despite the still-bullish longer-term technical postures.
So, which commodity markets are still sitting at the train station but are ready to take off? See on the chart below the commodity sectors’ price postures of the past several months. The left scale of the chart is percent, with all sectors starting at 100% of price in early October of 2023. Precious metals prices started to take off in early March and peaked (so far) at around 130% of price compared to early October. The soft commodities (coffee, cocoa, sugar, cotton and orange juice) started to rally in early January and peaked at just above 115% in early April. Energy and livestock sectors have languished the past several months. Grains, just in the past few weeks, however, appear to be coming to life. It’s my bias that the grain futures markets are the next bullish train that is very close to pulling out of the station.
Here’s another important element to consider, at present. Corn, soybeans and wheat are now just into their major U.S. planting and/or growing seasons. History shows “weather markets” in the grains usually occur at least once every year (to varying degrees) during the U.S. spring and summer months. Weather-market scares (usually because of hot, dry forecasts for major growing regions) pop up quickly and can die out quickly. However, big price moves in a short period of time can and do occur in the grain futures markets during weather scares.
The grain futures markets at present are all in fledgling price uptrends (except soybean oil) for the first time since last summer. And the weather-market-scare season is now at hand. The conductor of the bullish grain market train has just cried, “All aboard!”
Stay tuned!