Frost, Floods And Food: Are Commodities Getting Hot?

Raymond Lo likes plants in this Year of the Brown Earth Pig, water element.

“The industries that will perform well in the year of the Pig will be industries related to Wood element and Earth element.”

One major headline today:

Surging fruit prices set to drive China’s consumer inflation higher

“The average price of a basket of seven fruits surged last Friday to its highest in nearly five years…according to data released by the Ministry of Agriculture and Rural Affairs. Apple prices have climbed for nine consecutive weeks.”

Here is another headline:

Brazil frost worries send arabica coffee beans jumping Agrimoney.com

And another:

U.S. CORN PLANTING IS WAAAAAAAAAAAAAY BEHIND, USDA SAYS LESS THAN HALF OF THE CORN IS IN THE GROUND.

Finally,

Ghana Likely to Delay Some Cocoa Deliveries as Disease Worsens

“Ghana’s cocoa regulator is facing a shortage of beans to meet all its sales commitments as disease is affecting more of the crop than previously estimated.”

Frost, Floods and Food-is it time to buy?

(Click on image to enlarge)

Far left is the weekly chart of DBA or the ETF for Invesco DB Agricultural Fund. Although we have an impressive run off the lows, DBA has yet to clear the major resistance at 16.50.

That is what I am watching for.

In the middle is the coffee ETF-JO.

It must clear 34.00 really. In the meantime, this week’s low of 31.20 should be the low if the frost rumors are true.

Far right is CORN, or the ETF for corn futures.

The weekly chart shows that it has cleared the fastest exponential moving average (dotted line).

However, it has major resistance at around 16.05, or where the 50-week moving average is (blue line).

I’ve been shaking my head for close to a year, every time I read the misinformed who believe that the Fed’s inflation target rate is what we should watch before looking at commodities.

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