Bull Bear Graphic Offers Insight

The new at-a-glance rating is backed by some key data to help you make more sense of commodity markets.

Our new Bull/Bear scale quantifies four factors that influence prices: the fundamentals of supply and demand, seasonal trends, technical analysis of price charts and the flow of money in and out of the commodity markets. Each is rated on a scale from 1 to 5, with five being bullish and 1 bearish, with the overall reading the average.

Here’s how we evaluate the four factors every week:

Fundamentals are analyzed using the supply and demand tables developed from Farm Futures price forecasting model, which looks at production and usage both here in the U.S. and around the world. During the growing season U.S. yields are updated weekly, using crop ratings from USDA and results of our own Farm Futures surveys. The model projects a selling range for each crop that represents the top 15% of the expected price range for the marketing year. The closer current prices are to the top of that range, the less bullish a number is assigned to the factor. And, if the top of the selling range has already been achieved or is below the current price, a bearish rating, 1 or 2 is assigned.

Seasonal trends compare current prices to long-term averages. We include both averages from years of normal production as well as the trend from bullish years. In crop years featuring a major rally, like 2012-2013, averages for the year after a bull market are also compared.

Technical analysis focused on key moving averages, retracements, momentum indicators, reversals and gaps in its assessment.

Money flow focuses on what the speculative hedge funds are doing, as measured by weekly Commitment of Traders reports put out by the Commodity Futures Trading Commission. Our analysis looks at the how much buying power these big players have, based on past bullish or bearish bets they’ve made. This interprets a large bullish bet by funds as a bearish signal, because it could mean they’re running out of buying power to add to their position.

Finally, our Bull-Bear tool gauges the trend over a specific time period: The next 90 days. It also correlates positively with longer durations, but was designed as a medium-term tool.