After energy metals, agricultural products are quietly taking over the new round of commodity market trends

After the energy and metals-led rally in the commodities market, agricultural products are now entering a new upward trend.

As U.S. stocks have recently experienced increased volatility, funds are seeking investment options outside the technology sector, and the technical patterns of agricultural commodities have signaled a breakout. Fundstrat Technical Strategy Director Mark Newton is optimistic about grain prices, expecting corn, wheat, and soybeans to continue rising through 2026.

He stated that from a technical perspective, the rally in agricultural products is beginning within the broader commodities sector, while the upward momentum in U.S. stocks has started to waver in recent weeks. He predicts that despite crude oil prices potentially stagnating or reversing in the coming weeks, some commodities still have room to rise, with “soft commodities” likely to become the next area of catch-up, rejoining the recent strong performance of metals and energy.

Supply-side risks add fundamental support to the rally in agricultural products. Energy expert Anas Alhajji pointed out that 33% of global trade fertilizers come from the Gulf region, and planting seasons in Asia and Europe have already begun. He warned that even if Middle Eastern tensions ease in a few weeks, their impact on consumer prices could persist for months, stating, “If fertilizer issues escalate into a food crisis, the consequences could be even more far-reaching.”

Agricultural ETF Breaks Key Resistance Level

Newton continues to track the Bloomberg Commodity Index, which allocates 34% to energy and 27% to agriculture. He noted that the index has broken above last month’s high, reaching its highest level since 2022, and is expected to challenge its all-time high within the year.

Specifically, Newton focuses on the Invesco DB Agriculture Fund (DBA), which tracks 10 agricultural commodity futures contracts. According to FactSet data, DBA has a three-year annualized return of 13%, a ten-year return of 4%, and has gained over 3% in the past year.

Newton said that DBA has broken through a key technical resistance level. The fund first broke above its trendline in early February, and trading volume surged to its highest in recent years this Thursday, further confirming the validity of last month’s breakout. He expects DBA to test last year’s high of $28.49 and possibly push further toward $32, a target that could be achieved by 2026.

Newton believes that, based on the six-year cycle pattern in the grain markets, soybeans, corn, and wheat have all entered an upward trajectory. Looking at year-to-date performance, grain futures have shown clear gains: wheat futures are up 17%, soybeans up 13%, and corn up 3%. He stated that as investors seek options outside of tech stocks, agricultural commodities are gradually gaining attention in the market.

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