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

Softs are an area of the commodity space that hasn’t received much attention over the past several months, and for good reason.

As the rest of the commodities complex has been on fire, the action from this group has been muted as they’ve underperformed their peers significantly since last year.

Besides Sugar reaching our initial objective last month and Coffee breaking out of a 4-year bottom, Softs have been a real snooze fest.

Cotton continues to chop within a broad range. Cocoa is well below overhead supply. And OJ grinds sideways as it builds a 3-year base.

But it looks like Orange Juice futures are poised to break free to the upside.

Let’s take a closer look at this favorable risk/reward opportunity in OJ and lay out a potential trade setup to get long this base breakout, if and when it comes...

Here’s the weekly chart of Orange Juice futures:

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

As May just came to a close, many spent the weekend celebrating the kick-off to the Summer season at Memorial day barbeques. We did that too. BUT... being the nerds we are, we also spent much of the weekend pouring over some fresh monthly candles now that yet another one is in the books.

In the spirit of our sacred monthly candlestick process here at Allstar Charts, in this week's column, we're going to take a step back and discuss some of the primary trends at play in Commodities Markets.

We only get this incredibly valuable information ONCE a month. That's right. Just TWELVE times a year. As such, we really cherish weeks like these. 

So, let's dive right in and talk about one of the charts that really stuck out this month: None other than the good old Thomson Reuters $CRB Index, arguably the broadest barometer for the asset class as a whole.

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

Here we are on Friday, and it's been yet another eventful week for the commodity complex.

Steel futures ripped higher. Corn was limit-up on Thursday. Lumber continues to digest its gains with the same volatile fashion it made them in, giving back another 10% on the week.

And then of course there's Dr. Copper which appears to have successfully defended former resistance turned support at its all-time highs from 2011. It's impossible to overstate the importance of how this massive base in Copper resolves.

Bulls definitely don't want this move to evolve into a failed breakout... The 4.50-4.60 zone is the line in the sand. 

As for Energy Markets... Crude Oil making its highest daily close since October 2018 might be the biggest development of all.

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

Gold has been one of the last places we have wanted to put our money over the past eight months, second only to Bonds.

Other areas of the commodities space, like Base Metals, Energy, and Ags, along with risk assets in general have experienced an explosive rally. While Precious Metals have gone nowhere. But are we starting to see signs that this could be changing?

Last week we pointed out that Lumber had reached our target and could be due for a pullback. And we’re seeing that play out.

The previous week we noted that other procyclical commodities within the Base Metals group were also reaching our targets and testing areas of potential resistance. And like Lumber and so many other risk-assets, they remain trapped below key levels of overhead supply.

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

Lumber futures have been on an absolute tear since last spring. The vertical but volatile price action off last year's lows is something for the history books.

After trading down to 250 in late March of 2020, Lumber has since shot back above 1,600, where it trades today. It’s no wonder social media is full of people flaunting their wealth with stacks of timber. 

But we have to ask... is it time for a pullback? Is this rally overdone here? 

Let’s take a deeper look and discuss why we believe the logical move for Lumber over the short term is sideways... or even lower.

Here’s the chart. Look at that face ripper - up nearly 7x in just over a year!

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:

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

Are Softs finally showing signs of life?

Base Metals, Grains, and even Energy have posted strong rallies over the last year. Yet the Softs -- Cocoa, Coffee, Cotton, and Sugar -- have continued to struggle below overhead supply.

But we’re seeing all the traditional signs of a structural trend reversal from this lagging group right now.

Let’s take a closer look at Coffee futures to pinpoint why we believe this bear-to-bull trend change is underway… 

Here’s a weekly chart of Coffee: 

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

Pockets of strength are once again emerging within the Commodity space.

We pointed out that both the CRB Index and the ASC EW33 Commodity Index were breaking above key resistance levels, pointing to a burgeoning upside move last week.

That upside move has now materialized!

We saw Industrial Metals -- including Copper, Steel, and Aluminum -- continue to follow-through as they grind higher. 

But this week’s biggest moves came from the Agricultural Commodities.

Let’s take a look at the recent strength in Ags using our custom ASC Equally-weighted Agriculture Index.

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

Are Commodities poised for their next leg higher?

After weeks of sideways chop, we're beginning to see signs of strength that suggest an upside move is brewing.

Here’s some notable action: 

• Copper is resolving higher from a tight continuation pattern within the context of a primary uptrend
• Steel is again breaking higher from a quick coil pattern after making a parabolic move to record highs off last year’s lows
• Aluminum is next in line as it works its way higher within a massive consolidation
• Lumber continues to post new all-time highs day in and day out
• Other markets like Sugar and Wheat have found support at logical levels and look ready to resume higher

I think you get the idea...

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

Commodities continue to churn as they digest recent gains. This has been a recurring theme over the past several weeks.

However, there are signs that this might be changing.

For instance, Lumber pushes to new all-time highs, Steel futures hit new highs, and Platinum is back above a key level of resistance.

Pockets of renewed strength have started to pop up across various groupings within the Commodities space. That's valuable information.

Consider Rebar Futures forcefully breaking out of a 3-year consolidation while most of the market chops sideways.

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

Many of the same themes that we came across in last week's Commodity Report continue to play out.

Overhead supply keeps demand at bay while price churns sideways, offering mixed signals.

Like many areas of the market, Commodities are a bit messy.

While sideways price action and choppy market conditions are the norms at the moment, there is one consolidation in the Commodity space that demands our close attention.

As JC pointed out in last night's Monthly Strategy Session, one of the most important charts right now is the Copper/Gold ratio as its intermarket implications span far and wide.

From the desk of Steve Strazza @Sstrazza and Ian Culley @IanCulley

Similar to last week, many areas of the Commodity space continue to chop sideways below overhead supply.

Healthy digestion of recent gains makes total sense given the explosive moves since last summer and in many cases is much needed.

Given that sideways price action is the main theme across Commodities at the moment, one particular consolidation stood out this past week.

And that consolidation is in the Corn market.

Corn futures have ripped off of their March-2020 lows, taking out key multi-year highs along the way.