The Soft Commodities Make A Big Move
Michele Schneider | Feb 23, 2021 12:07AM ET
The pandemic has brought a multitude of supply chain disruptions reaching not only into the tech space, but also into the agricultural space.
Invesco Agricultural Fund (NYSE:DBA) recently cleared major resistance at 16.87 from the 200-week moving average, plus resistance going back from highs of 2019.
Participating in the rise of agriculture has put some specific soft commodities on our watchlist, like iPath® Bloomberg Coffee Subindex Total Return(SM) ETN (NYSE:JO) and Teucrium Sugar (NYSE:CANE).
The soft commodities markets are made up of perishables such as cocoa, coffee, cotton, orange juice, and sugar, which are also some of the oldest tradable commodities still around today.
From a technical standpoint, both look to be on the verge of a major breakout with a huge amount of upside potential.
JO recently cleared its consolidation area around $35 to $37.
Looking at the weekly chart shows that JO has been through quite some choppy price action in the past 14 months with $40.70 showing a major resistance level.
Switching over to a more fundamental standpoint, coffee’s main distributor is Brazil, which has its currency Bazilian Real consolidating around highs.
An increase in the value of the Brazilian real could cause an increase in the price for coffee, as it becomes more expensive to import to the U.S.
With that said, fundamental reasons can be very speculative as they are tough to grasp a timeframe for.
The main point is if JO breaks its current resistance, it could open the price range back to highs from 2019 around $45.60.
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Moving on to the sugar chart, CANE looks to be in the same boat as DBA.
It recently broke the 200-WMA and is just about to attempt a break over 2019 highs.
If this uptrend continues, and these key resistance points get cleared, the agriculture and soft commodity sectors could have a lot more room to grow.
- S&P 500 (SPY) 385 support. 394 resistance.
- Russell 2000 (IWM) 230 resistance. 217-222 support area.
- Dow (DIA) 312 support area. 314.99 10-DMA
- NASDAQ (QQQ) Main support 318.75 the 50-DMA
- KRE (Regional Banks) 66.04 high to clear
- SMH (Semiconductors) Next main support the 50-DMA at 231.06
- IYT (Transportation) All time highs
- IBB (Biotechnology) Support the 50-DMA at 160.05
- XRT (Retail) Needs to clear 81.46. 75.28 support
- Volatility Index (VXX) 10-DMA at 15.94
- Junk Bonds (JNK) Broke 109 support. Next at 108.76
- LQD (iShares iBoxx $ Investment Grade Corp Bond ETF) 131.68 monthly Bollinger band midline.
- (IYR) (Real Estate) Support 87.50 area.
- XLU (Utilities) Second close under the 200-DMA would confirm a distribution phase.
- GLD (Gold Trust) 169.56 the 10-DMA
- SLV (Silver) 26.10 needs to hold as new support.
- VBK (Small Cap Growth ETF) If 285 area doesn’t hold look for support at 50-DMA at 279.04
- UGA (US Gas Fund) 33.82 resistance to clear.
- USO (US Oil Fund) Resistance 44. 38 support 43-week EMA
- TLT (iShares 20+ Year Treasuries) Needs to find support.
- USD (Dollar) Needs to hold 90
- FXI (China) Could get stopped out tomorrow.
- EZA (South Africa) Needs to hold 48 Resistance at 52
- MJ (Alternative Harvest ETF) 23.20 next support.
- WEAT (Teucrium Wheat Fund) Choppy. Would like this to stay over the 10-DMA at 6.26
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