Soybeans/CRB ratio

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Chart above is my phasing analysis of the Soybeans CRB ratio for the early 1990s. It seems evident that we are currently in the second 18 month cycle of the second 9 year wave from a cyclical perspective. The correlation of this position within the 9 year wave with that of the previous 9 year wave is over 91%. We have reason to believe that such correlation is likely to continue going into the future. If we look at it from a sinus wave perspective we will realize that the peak of the first 54 month wave is synchronous with the peak of the second 18 month wave hence we have reason to believe this ratio is going to peak out early next year after which the CRB is likely to outperform for several years there after. This means that this current point in time is the ideal time to be long Soybeans considering we are expecting an 18 year cycle trough in terms of commodities and the CRB index is likely to underperform for the next 5-7 months. Personally I would wait for significant confirmation to confirm such an outlook. Considering that we are terminating the first 40 week cycle of the current 18 month wave a break of the 40 week FLD would be evidence enough to load up on soybeans going into the years end. Let us now take a look at the position of the 40 week FLD at this current point in time.

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Once this FLD is taken out to the upside I would be looking for the Soybeans/CRB ratio to continue higher going into the years end. There also seems to be a seasonal factor supporting a rally in Soybeans from around July going into March of the following year. All this cluster of events suggests that the grains are the sector one ought to be in in the initial portion of the upcoming 18 year wave in commodities!

Ahmed

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