The Federal Open Market Committee (FOMC) meets today and tomorrow to discuss monetary policy and provide their views on future interest rates. And it seems the Grains sector is tuned in. Select grains such as Corn, Soybeans, and Wheat are rallying today, and have rallied nicely throughout October. But, the sector is at (or nearing) the resistance levels that I wrote about on October 7th.
In my opinion, this is one of the most interesting commodities sectors to follow right now. The Grains were severely beaten down into the big US Dollar rally… but the dollar has paused, allowing the Grains to find some footing. And reports of a slower harvest appear to be contributing to recent price gains. And now we have the Fed meeting to add an element of intrigue to what’s next for the Grains.
The big question investors want answered is if the Grains have finally bottomed. In order for any asset to bottom, they need to do two things:
1) Put in higher lows.
2) Break above notable resistance.
The charts below are of Corn, Soybeans, and Wheat. Each of these grains are rallying into resistance that should be watched closely. Perhaps the Fed will help to further define the setup.
Corn is right there, right now. Today, Corn reached up and touched neckline resistance. A break above would be constructive. And any pullback will need to be watched to see if an inverse head and shoulder pattern develops (which would be bullish).
US Corn Futures Daily Chart (December 2014)
Soybeans touched up near the open gap resistance earlier today. This gap has acted like a magnet. A drive through (and beyond) the open gap would be constructive.
US Soybeans Futures Daily Chart (January 2015)
Wheat poked up near $5.40/bushel. A sustained move above this level would target $5.80. See chart below.
US Wheat Futures Daily Chart (December 2014)
Each of these select grains are also traded in ETF form: Teucrium Commodity Trust Corn (CORN), Teucrium Soybeans Fund (SOYB), and Teucrium Wheat Fund (WEAT).
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No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
