Commodities Weekly: Potential Supply Looms Overhead

From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley

Commodities continue to rip higher. 

Copper is breaking out to new all-time highs. Soybean Oil is trading at its highest levels in over a decade. These moves come as Grains, Lumber, and Base Metals have resumed their near-vertical ascent over the past couple of weeks. 

But risk assets hitting our price objectives or running into logical levels of supply are key themes playing out across the market right now.

As many commodities approach key levels of potential resistance, it raises an important question…

Will sellers step in as they have in stocks?

Let’s look at some charts that could provide valuable information for answering this question.

First up is Aluminum Futures:

Aluminum closes in on the breakout level of a decade-long base and the former 2018 highs. The key level near 2,500 has acted as resistance for more than a decade. 

It would make perfect sense for price action to stall at these levels before moving higher.

But what if it tears through former resistance instead?

If that’s the case, we’re most likely in an environment where risk assets are catching a bid.  

Next up we have a chart of Tin futures: Tin sliced through the 28,430 level, completing a tight consolidation and then resumed its vertical ascent. 

But Tin is now bumping up against former all-time highs near the 33,120 level. 

Again, this is a logical area for price to find resistance and consolidate.

On the other hand, price could rip right through this level on its way to new all-time highs.

If it’s the latter and Tin follows Copper higher, we have to imagine that bodes well for risk assets and the global growth theme.

Knowing how both Tin and Aluminum react at former highs will provide valuable insight into the current market environment.

Thanks for reading. Let us know what you think, and be sure to download this week’s Commodity Report below!