Waves.Agro – Wheat at lows

We at Orpheus have a habit of looking at top losers carefully, as real value occasionally lies with top losers. Wheat was the top loser among the agro complex registering 27% losses in the last 12 months. Sugar on the other hand was the top gainer for the respective period. The strategy of buying top losers and selling top winners at the same time every year might look poor, but back testing might throw some surprises. On this basis long wheat, short sugar might look like a workable strategy. We will cover this strategy on Alpha Agro in the weeks ahead.
Coming back to absolute performance, this is what we said on 5 Feb 2007, “Killing the Cotton farmer – While Dow Jones Cotton Index is finishing a multi year and a multi decade bottom. We anticipate supports coming in on the intermediate time frame.” Nov 2008 cotton bottomed and has been rising since then. Cotton closed the year with the second largest gain in the agro complex at 34%.
This is what we said on 27 Aug on Sugar, “The soft has been falling internationally from the last seven quarters, but the negative news about sugar barons miseries, output glut only mark the sentiment landscape from the last two quarters, while prices internationally have been stagnating near $10. Negative news could not push prices lower. We continue to see this as a low risk entry point for sugar too along with coffee and cotton, all of which should see better prices ahead.”
What happened? Barring Coffee which is still below 2007 prices, cocoa and sugar pushed up from Oct 2008 to Jan highs up 140% and 90% respectively. We also mentioned about how equity play works contrary to cocoa and sugar. As equity markets came under stress the two soft’s took off. Wheat looks to be bottoming and we continue to look at entry levels on the grain. The latest WAVES.AGRO carries updates on the agro commodities along with their respective performance cycles.
Enjoy the latest WAVES.AGRO.
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ORPHEUS GLOBAL RESEARCH
WAVES.AGRO is a perspective product published once a month. The report covers Coffee, Sugar, Cocoa, Wheat, Corn and related FUTURES. The product highlights Primary (Multi Month) and Intermediate (Multi Week) price trends. The report illustrates key price levels, price targets, price projections and time turn windows. The product uses Elliott waves, traditional technical analysis tools and sentiment indicators.
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