How are grain investments performing?

The corn market is showing a bullish trend compared to other major grain markets. Soybeans are benefiting from misinformation shared on social media, while wheat is experiencing a divergence between fundamental and technical indicators.

Having been in the commodities business since the 1980s, I have always seen the commodity complex as an investment opportunity. Back in the day, it was challenging to perceive commodities as anything more than short-term ventures. I vividly remember my financial advisor cautioning me about treating mutual funds like commodities; a piece of advice I needed multiple reminders to heed. In the mid-2000s, during a trip to New York for an investment meeting unrelated to corn or soybeans, I engaged in a brief but engaging conversation with CNBC’s lead stock market analyst about the commoditization of US stock indexes. Over the years, my perspective on analyzing long-term charts for commodity markets has evolved significantly. In my twenties, a long-term commodity market position was a matter of days or a week, but as I entered midlife, my focus shifted to weekly charts, leading to the development of what I call the Goldilocks Principle.

My primary focus has always been on the corn market, in line with the investment principle of “Invest what you know.” Drawing from almost four decades of studying grain fundamentals, I rely on real supply and demand dynamics rather than the monthly reports released by the USDA. This knowledge base provides me with a better understanding of grains compared to other sectors. When considering long-term investments in the grains sector, I factor in both technical patterns and my fundamental understanding.

At the end of January, the immediate-term fundamentals for corn and wheat were bearish, with indexes below the previous five-year end-of-month lows. In contrast, soybeans maintained their position above the January low due to market manipulation. The first week of February witnessed a soybean rally sparked by misinformation, showcasing the power of social media in influencing market trends.

The Teucrium Corn Fund (CORN) continues to follow a sideways trend but recently completed a bullish outside month, potentially attracting more buyers. The Teucrium Soybean Fund (SOYB) confirmed a major uptrend in December 2024, with a technical outlook pointing to higher prices in the future. The Teucrium Wheat Fund (WEAT) also showed a bullish key reversal in January, indicating a trend reversal.

Looking ahead, the fundamentals for corn remain strong, supported by favorable spreads and the potential shift in planting area from corn to soybeans. On the other hand, while soybeans have experienced a politically motivated rally, wheat faces challenges due to supply and demand dynamics. As I continue to analyze long-term charts and trends in the commodity market, my focus remains on identifying investment opportunities based on a combination of technical and fundamental factors.