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Long-Term Trend Analysis of Key Agriculture Commodities

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A look at key trend lines, technical support, and resistance levels

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Most conversations around the global economy and fiscal outlook revolve around two key subjects: money printing vs. austerity, and higher taxes/more spending vs. lower taxes/less spending. Both are hot buttons and equally important to global growth. The consequences of getting policies right/wrong fuels sub-arguments surrounding inflation vs deflation and global growth slowing vs rising population.

But the important end-game to each of these arguments leads to, in my opinion, the most important byproduct of global economic policy amidst a rising population: commodity prices. Technology has increased competition and assisted in keeping prices from getting out of control (a life saver thus far); this is especially true with consumer products. But the current transition to the Technological Age has also seen rising commodity prices. Volatile, yes, but most have remained in a bull market, holding at or above longer term trend lines.

With this in mind, I thought it would be good to look at some long-term charts of key agriculture commodities. As is the case with most of my chart work, I'll look to highlight key trend lines and technical support and resistance levels. But note that the future is still very uncertain and policy decisions over the coming year will likely affect commodity prices for some time to come.

This shouldn't be news to anyone as we are operating in a highly sensitive and politicized world while trying to solve the US "fiscal cliff" and current financial imbalances. And across the pond we have the ongoing eurozone debt crisis. That's why identifying and following key technical and psychological levels will be important going forward.

With this in mind, let's turn to the charts.

Corn Spot Price Long Term Chart:

After retracing roughly 50% of the 2009 low to 2011 high (at 550), corn surged to new highs in 2012. Key intermediate support resides around 650. [The average retail investor would not be in the spot market but would be participating in the commodity via an ETF such as Teucrium Corn Fund (NYSEARDCA:CORN).]



Wheat Spot Price Long Term Chart:

Wheat prices saw another run higher in 2012. However, thus far, the move has only produced a lower high. If wheat prices are going to threaten all time highs, they will need to break out above the 61.8% Fibonacci retrace level (of 2008 highs to 2010 lows). [The average retail investor would not be in the spot market but would be participating in the commodity via an ETF such as Teucrium Wheat Fund (NYSEARDCA:WEAT).]





Soybeans Spot Price Long Term Chart:

Soybeans remain in a bull market, contained in the lower have of the bullish channel. The lower, long term support line will be important to watch if further pricing pressure materializes. [The average retail investor would not be in the spot market but would be participating in the commodity via an ETF such as Teucrium Soy Fund (NYSEARDCA:SOY).]



Sugar Spot Price Long Term Chart:

Sugar is caught in a wide and volatile bullish price channel. A break above the 2011-2012 downtrend line could ignite another rally in sugar prices. [The average retail investor would not be in the spot market but would be participating in the commodity via an ETF such as Teucrium Sugar Fund (NYSEARDCA:CANE).]



Coffee Spot Price Long Term Chart:

Coffee has been in a steep two year downtrend that recently saw prices puncture the long term trend line. That said, the recent lows were the 61.8 percent Fibonacci retracement of the 2002 to 2011 bull run. If coffee prices are going to make another run higher, they will need to retake the long term trend line and follow through higher. A failed rally attempt would be a sign of weakness. [The average retail investor would not be in the spot market but would be participating in the commodity via an ETF such as iPath DJ-UBS Coffee Subindex Total Return (NYSEARDCA:JO).]



Editor's Note: Andrew Nyquist is an independent investor based in the Minneapolis area. This article originally appeared on his investing and economics site, See It Market.

Twitter: @andrewnyquist
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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