Can You Handle Strong Cocoa?

Perhaps a better question is: Can the economy handle the rising prices now in an assortment of soft commodities?

Cocoa and soybeans, in addition, to cotton, are out in front of most softs here. 

On the NIB ETN for cocoa, below, we can see a decisive base bottom breakout in play. The softs have been notorious teases for years, with no real staying power in any and all rallies. 

However, the DBA ETF (for a basket of ags) is actually holding back over its 200-day moving average for the first time in years, after prior rallies were turned away ferociously. 

If you only trade equities, you may be asking the proverbial, "So, what?" question about this analysis. 

First and foremost, ag-related stocks like ADM BG CF MOS NTR are perking up nicely today and may finally be ripe to rally as a group. And when they move, they tend to move sharply and in unison. 

Next, the issue will be whether inflation from these commodities eventually wreaks havoc on the broad economy. We are not at that stage yet. But if they keep it up it will be something to monitor. 

For now, my focus is on the galvanized ag stocks making as strong a case for a bull run as they have in a good while, which means CORN and WEAT are ripe to follow the soft commodity leaders higher.