Will Soybeans become the new Cocoa?

Will Soybeans become the new Cocoa?

The Soybean market rarely hits the headlines as often as Nvidia (to put it mildly), but savvy investors always take note of promising setups in all large and liquid markets, especially when the upside potential appears so attractive. Yes, I know it can be hard to divert your attention away from the hottest shares that grab most of the headlines, but consider this: Nvidia trades at a very high price while Soybeans are very cheap. Which one do you believe has the greatest upside potential?

Last year, I uncovered a similar potential in Cocoa. Back then, was anyone you know following it? Were you? I certainly was because I know that when a market becomes very quiet for a length of time with little interest outside of the commercials, that is when it can spring to life when a new element is introduced. And huge moves often occur. And they now have.

And the new element I identified last year was the approaching El Nino weather pattern that promised to be an extreme event this year. And so it is proving with widespread droughts in the West Africa Cocoa crop growing area. But back last year, this was a gleam in my eye as I positioned long in anticipation after I identified a potentially very bullish wedge chart pattern (I covered this is recent blogs).

The long-discredited climate change ‘hockey stick’ graph was shown to be a total fake, but that is certainly not true of my Cocoa Hockey Stock! This is completely real as prices have zoomed up from around $3,000 last summer to a recent $8,600 (and climbing) – a gain of 200% in nine months. And that gain just about matches that of Nvidia in the same period:

As the El Nino is doing its roughly 4-year cycle thing, crop estimates have plunged to about 50% of expected. That is pushing up our beloved chocolate prices with ‘Ester Egg Prices Doubling’ MSM headlines prominent. So finally, Cocoa is grabbing some public attention. Will Soybeans be next?

But let’s not get too carried away! When MSM headlines appear in an off-the-radar market, I start to get nervous. Yes, momentum is carrying prices higher but that will end at some point – and when it does, cocoa prices should reverse very sharply and produce a typical commodity price spike that only commodities can produce.

Obviously, with the time delay in the Cocoa business, retail chocolate prices have not yet reached their highs. We know that chocolate is a relatively inelastic market but even so, with Easter looming, I can see consumption taking a bit of a hit. We are already seeing shrinkflation with smaller bars.

Not only that, but the El Nino relative – La Nina – appears to be taking over the Pacific with colder water temperatures and shifts in the jet streams. That should restore moisture to West Africa and a more bountiful season next year.

If this does occur, you can be sure prices will be a lot lower in anticipation. Those in the Cocoa trade that follow global weather patterns will be fully aware of this potential – and trade hedging will be intense. But we are not there yet and the music is still playing.

OK, that’s Cocoa. What about the potential for Soybeans?

I posted this chart early this month to alert my VIP Traders Club members to this outstanding setup on the weekly chart. While it bears no relation to the Cocoa chart (why should it? – they are totally different animals), but like Cocoa last summer, the beans have just made a three-year price low under heavy selling by the trade of the huge 2023 season crops in both hemispheres.

But to my eyes, I see massive opportunity. We had a roaring bull market during the pandemic leading to a record high of $18/bu in June 2022. With the heavy crops under favourable weather, prices sunk in a clear a-b-c corrective pattern to the $11/bu area – a Fib 62% correction and on a huge mom div.

That sets the wave ‘c’ low as a likely large wave 2 correction off the 2022 wave 1 high. If this is correct, we are now starting a huge wave 3 up that should take prices well above the wave 1 high of $18.

Now to reach this goal, I need to see adverse weather patterns this coming season. And where do I think adverse weather could emanate from? Why, from the coming La Nina! We have seen an intense El Nino (that has produced the extreme drought conditions in West Africa). So can we expect an equally intense La Nia that produces record cold in the Northern Hemisphere this year and next?

If so, that could cut expected crop production savagely. And put a rocket under prices.

China is a huge importer of the beans and I see recent shipments from Brazil (the world’s main exporter) are up sharply. Can the Chinese be stockpiling in anticipation of lower crops and higher prices next year?

For these reasons I am starting a campaign in Soybeans. I am also looking at a campaign in the related commodity, Corn.

Wheat is a very different grain and it has very different supply/demand picture.

I will have Special Report on Wheat soon – look out for it!

Why not join me in my campaigns by taking a two week Free Trial to my VIP Traders Club.

Have Cannabis stocks found their bottoms?

Is it possible that the US Feds are about to re-classify cannabis from being a Class 1 drug in the same league as heroin, ecstasy and LSD? Even by the woeful standards of our governments, this is utter madness.

Amazingly, fentanyl – the hugely toxic drug that is gathering major headlines in the UK – is classified as a weaker Class 2 drug!! That is surely madness squared. The Fed’s anomaly with some of the States who have legalised the weed has been a headwind for the industry and share prices have been on the floor for many months.

But with this possible awakening of sanity by the Feds, can the cannabis industry start to get back on its feet and revive prospects for the shares that have been in the basement for many months?

Some of the major plyers such as Canopy Growth, Tilray, Cronos and Aurora Cannabis are already moving up off their basement levels as the little Fed ray of sunshine appears out of the gloom. The chart plots the sorry state of a major cannabis index.

And another tailwind for the sector is that on 1 April, Germany is set to legalise the drug. And weed investors are hoping that won’t be an April Fool joke.

But as a candidate for a Buy Low/Sell High campaign, there are few if any comparable beaten down sectors on the market today as the major indexes make new ATHs.

The Dow/S&P/Nasdaq are completing their waves 5 of 5 to their highs

The divergence between the real economy and stocks is as wide as the Grand Canyon. The EV revolution that promised so much has failed despite taxpayer billions wasted in subsidies. While the UK and the US are actively herding young males from overseas to jump across their borders in an effort to boost flagging GDP, investors in US shares are convinced the AI revolution will do just that anyway and do what the EV revolution has failed in. Where are the promised ‘green’ jobs?

And the AI siren call is luring US Mom ‘n Pop investors in record numbers to own stocks. So what possibly could go wrong? For one thing, this cohort of investors have a very poor track record with timing. Until recently, they shunned stocks preferring the safety of bonds with the new high yields. They have embraced the classic Buy High/Sell Low approach. We await their selling.

And suddenly, they have switched to shares in a flash of FOMO – but right after a stunning record-breaking advance from last October’s lows. The S&P has also met the upper tramline resistance

While I have very recently been trading the long side of the final fifth wave, I do not intend to hang around for much longer. There should be one more small pop up next week but that should be it and I will be looking to reverse positions.

Gold has been following my roadmap- but what now?

In mid November, I posted my latest video on Gold – Latest Gold update – be ready for massive surge -when the market traded around $1935. I stated it was poised to move much higher and last week it hit a $2,225 high about $200 higher in a sustained rally. So far, so good. It is pulling back now so what do I see up ahead? Has the top been reached or is there more upside to come?

I will have an update shortly so please watch out for it. My targets may surprise you!

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