Corn, soybeans, and wheat have continued strong uptrends in 2008 due to the rising production of ethanol and biodiesel as well drought in areas of the world which normally plant grain crops. Wheat has had the greatest moves as a combination of supply and demand factors have caused the various wheat markets to experience volatility never seen before. These three grains, shown in the chart below, are all above their long-term trendlines. The grain markets have also driven by increased speculation, partly due to a weak stock market. Inflation appears to be accelerating, affecting a general rise in commodity prices. Technical trends are more likely to continue than reverse, and trends will usually carry farther than we think. The grain markets will eventually lose momentum, but when that occurs is left to be seen. Prices as of Friday’s close: Corn $5.56’0 per bu. (+2’6), Soybeans $15.22’0 per bu. (+23’4), Wheat $10.73’0 (-96’0).
Chart Courtesy of TradeStation.
Dr. Charles B. Schaap is the author of ADXcellence —Power Trend Strategies. He is a full time trader of futures and equities. His website is www.adxcellence.com .
