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GRAINS: POISED TO REAP SOME BIG GAINS?

Chicago soybean futures are lower on Monday, falling further from last week's three-month high as uncertainty over U.S. tariffs added pressure, after the Supreme Court struck down President Donald Trump's sweeping tariffs. Wheat is falling for the first time in four sessions, while corn is edging down.

That said, the monthly charts are showing what appears to be an interesting setup for a grain futures price-weighted composite composed of CBOT Corn Cc1, Soybeans Sc1 and Wheat Wc1.

After peaking in early March 2022 at $38.85, a little over a week after the Russian invasion of Ukraine on February 24 of that year, the grain futures composite lost more than half its value into its August 2024 low at $17.90.

The August 2024 low formed right around the support line from the 1999 low. This line has held on a monthly closing basis, while the composite has been consolidating over the past year and a half or so. The composite is now around $21.25.

Of note, the composite's Bollinger Bandwidth, a historical volatility measure, on a monthly basis, contracted to an all-time low in January. Compressed Bandwidth is directionally agnostic, but it does suggest a market that is ripe for much more spirited action, if not its next trend.

Heading into the last week of February, and the four-year anniversary of the Russian invasion of Ukraine, monthly Bandwidth, on composite strength, is on pace to tick up for the first time since August 2024.

Given the especially compressed Bandwidth, a composite breakout above its highs of the past year or so in the $21.67-$21.93 area has the potential, amid what could be increasing upside momentum, to take on a life of its own.

A reversal back below the 20-month moving average $(MMA)$, which is now just below $20.00, can suggest a stalled upside turn. The monthly support line will be around $19.10 in March.

Meanwhile, a price-weighted composite of the Teucrium Corn CORN.K, Soybean SOYB.K, and Wheat WEAT.K ETFs is on track to score its first monthly close above its 20-MMA since January 2023.

The VanEck Agribusiness ETF MOO.P has already broken out to its highest level since August 2023.

(Terence Gabriel)

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EARLIER ON LIVE MARKETS:

ROTATION INTO VALUE NOT OVER YET - JPM CLICK HERE

MINERS' CAPEX SIGNALS KEEP BOFA WARY ON EQUIPMENT MAKERS CLICK HERE

TECH DRAGS STOXX LOWER AS TRADE CHAOS WEIGHS; UTILITIES RISE CLICK HERE

BEFORE THE BELL: EUROPEAN FUTURES INCH LOWER CLICK HERE

COUNTING THE COST OF TARIFF CHAOS CLICK HERE

(Terence Gabriel is a Reuters market analyst. The views expressed are his own)