Energy strength doesn’t just impact energy stocks. It ripples through transportation, chemicals, industrial inputs, and agriculture.
When Crude Oil is working, it’s rarely just a Crude Oil story. It tends to spill over into other parts of the commodity complex.
That’s why it’s so important to zoom out and look at the relationships beneath the surface.
When you overlay Crude Oil and Wheat, the similarity is striking.
Over the long term, these two markets trade far more alike than most investors realize. They rally together, they top together, and they base together.
The 35-week rolling correlation reinforces this. As you can see, it's consistently positive and strengthening again in recent months.
So if Crude Oil is resolving higher and energy leadership is expanding, history suggests the grains complex shouldn’t be far behind.
And the price action is starting to confirm that thesis.
Our Gold Rush Grains Index, an equal-weight basket of Soybeans, Soybean Meal, Soybean Oil, Corn, Wheat, Rough Rice, Oats, and Canola, endured a brutal 45% drawdown over the past few years.
That wasn’t a shallow pullback. That was a full reset. Sentiment was washed out. Weak hands were forced out.
The price is now carving out a textbook double bottom on the higher timeframe.
When we zoom in, the shorter-term structure looks even more constructive.
Our Grains Index has resolved from a multi-month accumulation pattern and is now trading at its highest level since Q4 of last year.
We’re seeing higher highs, higher lows, expanding momentum, and early signs of range expansion. That’s exactly how a new trend begins.
So if energy is working, the grains should, too. And if the grains are working, agribusiness should be right there with them.
That’s exactly what we’re seeing in the VanEck Agribusiness ETF $MOO.
The VanEck Agribusiness ETF is one of our favorite ways to express a bullish thesis on fertilizers, seed companies, equipment manufacturers, and global agricultural infrastructure.
And right now, the fund is decisively reclaiming the volume-weighted average price anchored to the 2022 all-time high. That AVWAP has acted as resistance on multiple occasions over the past few years.
Every rally attempt stalled there... Until now.
This week, the price closed back above that key level of interest, indicating that the buyers are back in control of the primary trend.
We want to own MOO above 82, with a target of 109 over the coming 6-12 months.
Grains - Commercial hedgers added nearly 3,000 contracts to their Wheat position. This is the smart money telling us that the commodity is cheap down here, and the risk is skewed to the upside.
Softs - Commercials added over 62,000 contracts and set a new record net-long position in Sugar. Massive net-long positions have historically come near major lows.
Currencies - Commercial hedgers added more than 18,000 contracts to one of their largest net-long Australian dollar positions in recent years. This should be bullish for base and industrial metals.
For those looking to make the most amount of money possible from this rotation into energy, the Commodities Trade of the Week highlights two of our favorite setups in the sector.
Premium members can see the entry and target levels below. 👇
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