Commodities are in the early innings of a secular bull run.
The list of raw materials hitting all-time highs since 2020 includes Gold, Copper, Wheat, Soybean Oil, Cattle, Orange Juice, Cocoa, Heating Oil, Gasoline, Palm Oil, Lumber, Tin, Rebar, Iron Ore, and Coal. (If that roll call doesn’t scream commodity supercycle, I don’t know what does.)
It’s an exhaustive list that will only grow in the coming years. Remember, these cycles can last decades. We’re only in year four!
Of course, there are also some laggards amongst the ranks. (ahem, Crude). But don’t lose sight of the bigger picture!
Even Soybeans are queuing up for new all-time highs…
Check out soybean futures zoomed out to the 1950s:
What happened to those everyday commodity contracts the average investor follows?
I’m talking about crude oil, gold, and copper.
These days, it’s all about cattle futures, orange juice, or cocoa hitting an all-time high.
I’m sure everyone down at the NYMEX or the folks over at the CBOT in Chicago are having a ball. But what about the stock traders trying to get a piece of the action?
Sure, the energy trade is starting to work again. But gold has been a range-bound mess since the summer of 2020. And gold mining stocks have been an absolute dumpster fire.
It just doesn’t make sense amid a commodity bull run…
No, the absence of gold and copper breakouts doesn’t make much sense, and neither does crude oil underperforming gold as interest rates rise:
Cotton is forming a bull flag following last week’s breakout. Coffee futures are coiling below a critical polarity zone. Cattle and hogs are running wild. Even Dr.Copper is perking up, posting positive returns over the trailing five days.
And don’t forget about cocoa futures as they continue to print fresh all-time highs.
With all this action heating up, let’s turn our attention to one of 2021’s most explosive markets…
Lumber.
Remember all the lumber memes on Twitter?
Dudes were posting their W’s sitting atop stacks of 2x4s and plywood. I’ll never forget it.
As a trader, I prefer to avoid lumber futures. It’s a thin market. But I can’t ignore the yearlong base forming on the daily chart:
Who is this tiny person? And who will they aspire to be?
These are impossible questions to answer.
As you can imagine, the wifey and I were stumped upon meeting our baby girl earlier this week.
Every time I looked into her eyes, I could hear her plead, “Give me a name, boy!” A situation ten-year-old Ian never fathomed – even while watching The NeverEnding Story.
After a few days of deliberation, hours of snuggles, and the casual piercing gaze, I could only discern one thing: she smelled good.
So I offered up “Coco.”
It was on our shortlist. Plus, will we ever forget this year’s epic rally in cocoa futures? I certainly won’t.
Well, we ultimately landed on Cora, which suits her in some indescribable way.
But if I hadn’t cut technology this week so I could focus on my girls, I might have thrown “Cotton” into the ring.