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Commodities (Softs & Grains): What Stands out Today?

Plus, other commodity-relevant asset classes to watch

by Dana Weeks
Updated: April 23, 2018

Editor's note: In the full version of this interview, Jeffrey gives you his forecasts for coffee and cotton. The full version is for subscribers only; learn more about Commodity Junctures below.

Dana Weeks:  Hi, I'm Dana Weeks, and I'm back again today with Jeff Kennedy, Elliott Wave International's Chief Commodity Analyst and editor of Commodity Junctures and Trader's Classroom. Welcome back, Jeff.

Jeff Kennedy:  Hello, Dana.

DW:  So let's start off today with softs and grains. How do they look overall and are they still splintered as they were at the beginning of the year?

JK:  Well, let's start with the grains, Dana. I think the grain market is doing well as far as moving the way it should. And what I mean by that is you're seeing a lot of synchronicity between soybeans, corn, soybean meal, which is what you should see. Now going to the soft sector, I'm still looking a bit higher in cocoa, still looking a bit higher in cotton. But the coffee market and sugar market, my primary focus is still down. So the soft sector is a little bit splintered. You've got two markets going up and two markets going down.

DW:  And on the rare occasions where most if not all your markets are moving in the same direction, does that make for a stronger signal, or is it more coincidental?

JK:  I think it actually makes for a stronger signal. For example, if I'm working a bullish wave pattern in soybeans and I also see a comparable structure in soybean meal and a comparable structure in corn, all of that bodes well for a very strong forecast in all three of those markets moving forward.

DW:  And Jeff, are there any other asset classes that are standing out for you right now?

JK:  Well, I think so. As far as the Dollar Index goes, I'm still looking for additional decline in that market. The trend has clearly been down on the dollar index since early 2017. I think we still have a bit more to go to the downside. And I'm sure as all the viewers understand that there is an inverse correlation between the dollar and the CRB index, which is also interesting too because we've seen a lot of strength to the upside in crude oil recently. Now the reason that is significant is because the CRB index is heavily weighted toward the crude market. So short term, I think what we're going to be seeing in the crude oil market is additional rally, which bodes well or actually makes sense because I'm actually anticipating additional decline in the Dollar Index.

 

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