That's Not a Rally... THIS is a Rally: This Grain's Uptrend Has Put All Others to Shame

Back in March 2020, Elliott waves showed a low in place for soybeans. What happened next might soy-prise you!

by Nico Isaac
Updated: February 03, 2021

One of the most memorable movie quotations of the 20th century is from "Crocodile Dundee." A New York mugger pulls a knife on outback survivalist Mick Dundee, to which he casually pulls out his own, crocodile poaching blade 5 times its size and says, "That's not a knife. THAT's a knife."

Well, this chart of the popular grain commodity soybeans conveys a similar spirit, showing a truly impressive rally that began late last March and catapulted prices 40%-plus to 7-year highs on January 21.

Now, that's a rally.

Even mainstream news outlets couldn't hide their ex-soy-tment! Said one December 31 MarketWatch:

"Welcome back to 'beans in the teens.' The mantra, which is popular with soybean traders and farmers alike, was back in operation on the final trading day of 2020."

As for what caused soy to soar, the fundamental options run the gambit from "shrinking grain supplies" to dry, hot weather in South American growing regions. But those are all footnotes to the supposed main event; namely, soybean's "resistance" to Covid-19. Said one January 5, 2021 allaboutfeed.net:

"The Corona-crisis had a significant effect on the global economy in 2020. Normally, this reduces the demand for agricultural raw materials, resulting in lower prices, but the agricultural futures markets are proving to be resistant to the economic downturn."

That's easy enough to say now -- after soy prices rallied 40% plus over the course of the last 10 months. But it's the opposite of what the mainstream experts were saying at the pandemic's beginning. Back in March 2020, the grain belt was reeling with unanswered questions -- namely, how much crop to grow' questions about global demand changes, trade war with China, and so on. One March 16, 2020, Farm Lead article warned the ag market faced a lethal combination:

"As these are unknown times, there is obviously a lot of fear in the market and accordingly, things get volatile, but mainly, fear is a price killer"

Added another April 7 fb.org: "Coronavirus sends crop prices into a tailspin."

The mainstream outlook for soybeans was bleak: Uncertainty equated to fear which equated to certain death. And yet -- recall the grain instead rallied to 4-year highs.

This bullish scenario was exactly what our March 2020 Monthly Commodity Junctures called for. There, editor Jeffrey Kennedy outlined the year ahead for soybean prices with the following chart and called for further consolidation followed by a game-changing breakout:

"I believe we have put in a very significant low back in 2019 and we will indeed advance. Ultimately, we expect the larger, five-wave structure to the upside in wave C to carry to $11 a bushel by the time we move into the end of the year."

From there, beans took off to the upside. By December, prices stood at $12 a bushel, exceeding the initial Elliott wave target. That's when our December 2020 Monthly Commodity Junctures gave this update:

"We could easily see the move up in soybeans continue to grind higher. We've made it to $12 a bushel. We can move up to $13 and then $14 and then $15."

And -- from there, soy rallied further above $14 a bushel, as the Elliott wave price pattern that began almost a year ago has continued to progress.