I was flipping through commodity charts last night and found an interesting pattern in Corn that I hadn't noticed yet. When you zoom out to a very long term chart, it's pretty obvious what it looks like.
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| Corn Weekly |
There is some debate over the effectiveness of cup and handle patterns with this long of a duration, but it looks pretty solid to me. If it holds this area and continues higher, it could have major implications for inflation in the future.
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| Corn Seasonality (Sentmentrader.com) |
Seasonality indicates this time of year is generally weak for corn. The recent strength in corn (and other grains) has been primarily attributed to drought conditions throughout the Midwest region. Corn also has the ethanol component and rising demand from Asia. All things considered, it certainly appears that we have a recipe for serious food inflation going forward. This will start filtering through the economy in the months ahead and I thought it was worth looking at.
