About that 2014 Commodity Breakout…

Amidst all of the talk of the death of volatility, the inexplicable bond rally (rates lower), and broken record of new all time highs in US stock markets – we’ll excuse you if you didn’t notice some rather bizarre behavior in farmed commodity markets in May. The poster child was Wheat, which had a trend reversal on May 6th, and didn’t look back, losing on 14 of the next 16 days to post a negative -13.0% return in May.

New Picture(Disclaimer: Past performance is not necessarily indicative of future results)
Chart Courtesy: Finviz

But it wasn’t just Wheat  – similar patterns were seen in Corn, Soybean Oil, Rice, Coffee, and Cotton:

New Picture (1)(Disclaimer: Past performance is not necessarily indicative of future results)
Chart Courtesy: Finviz

What’s going on? Did these grain markets follow the “Sell in May” saying?  Was it the S&P hitting new all time highs? Was it an easing of tensions in the Ukraine (in Wheat’s case)? Was it the price distortion of many Ag commodities like M6 Capital suggested in their newsletter? Maybe. We’re not exactly sure. But one thing’s for certain, the sharp run higher seen earlier this year has reversed course, with Ag heavy commodity indices such as the CRB Index showing the recent weakness.

CCI Reuters Commodity Index(Disclaimer: Past performance is not necessarily indicative of future results)
Chart Courtesy: Stock Charts

A longer perspective can also be of some help here, where looking back 5 years we can see the 2014 moves higher in Coffee and Wheat were reversals of years long down trends. Perhaps these were just short coverings and dead cat bounces instead of the start of a new uptrend?  Perhaps this is a normal consolidation period before moving higher again.  Only time will tell at this point, but one thing’s for certain – the months long pattern of higher daily and weekly highs and lows, which broke the years long pattern of lower highs and lower lows, is now itself being broken.

Coffee
Wheat(Disclaimer: Past performance is not necessarily indicative of future results)
Chart Courtesy: Finviz

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Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

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