Data-Driven Commodity Research, The Commodity Report

The Commodity Report

Data-Driven Commodity Research

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Commodities

<ul><li>The world economy will be as weak next year as it was in 2009 after the financial crisis as the conflict in Ukraine risks becoming a “forever war,” the Institute of International Finance said.</li><li>Global growth is expected to slow to 1.2% in 2023, according to the IIF.</li><li>The slowdown will be led by Europe, which is impacted most by the war, according to the IIF. </li></ul>

The world economy will be as weak next year as it was in 2009 after the financial crisis as the conflict in Ukraine risks becoming a “forever war,” the Institute of International Finance said.Global growth is expected to slow to 1.2% in 2023, according to the IIF.The slowdown will be led by Europe, which is impacted most by the war, according to the IIF. 

<ul><li>The Rabobank issued a research note last week where they forecasted that prices for agricultural commodities like coffee, feed grains and oilseeds could dip next year as many major economies enter recession, but also stated that they will remain high in historical terms.</li><li>We think the general call is correct, but the timing isn’t. We already see this dip move playing out at the moment.</li><li>Just take a look at coffee, cotton, oil, or copper. We believe this dip in the long-term cyclical bull market will end towards Q2 of 2022 before the rally in many commodity markets resumes again as demand strikes back.</li></ul>

The Rabobank issued a research note last week where they forecasted that prices for agricultural commodities like coffee, feed grains and oilseeds could dip next year as many major economies enter recession, but also stated that they will remain high in historical terms.We think the general call is correct, but the timing isn’t. We already see this dip move playing out at the moment.Just take a look at coffee, cotton, oil, or copper. We believe this dip in the long-term cyclical bull market will end towards Q2 of 2022 before the rally in many commodity markets resumes again as demand strikes back.

<ul><li>Fundamentally speaking, it was nearly a perfect week for commodities as much major news aligned during the week after China eased some Covid restrictions, raising hopes of a demand recovery in the world’s second-biggest economy. </li><li>Almost all major commodities traded higher following China’s move to reduce the time that travelers and close contacts of infected people must spend in quarantine, a significant amendment to the Covid Zero policy.</li><li>China’s loosening of restrictions strengthened a rally that began on Wall Street, with risk assets rising after US inflation slowed.</li></ul>

Fundamentally speaking, it was nearly a perfect week for commodities as much major news aligned during the week after China eased some Covid restrictions, raising hopes of a demand recovery in the world’s second-biggest economy. Almost all major commodities traded higher following China’s move to reduce the time that travelers and close contacts of infected people must spend in quarantine, a significant amendment to the Covid Zero policy.China’s loosening of restrictions strengthened a rally that began on Wall Street, with risk assets rising after US inflation slowed.

<ul><li>Manufacturing Sentiment in the US continues to decline. US manufacturing neared stagnation in October as orders contracted for the fourth time in five months, while an index of prices paid fell to a more than two-year low.</li><li>As most commodity groups are heavily correlated with the ISM data, this will provide significant headwinds over the next six months or so, according to our leading indicators.</li><li>By now, there is quite a divergence in industrial production in general. We expect industrial production to crash over the next few months, which will continue to be a nasty factor for commodity demand.</li></ul>

Manufacturing Sentiment in the US continues to decline. US manufacturing neared stagnation in October as orders contracted for the fourth time in five months, while an index of prices paid fell to a more than two-year low.As most commodity groups are heavily correlated with the ISM data, this will provide significant headwinds over the next six months or so, according to our leading indicators.By now, there is quite a divergence in industrial production in general. We expect industrial production to crash over the next few months, which will continue to be a nasty factor for commodity demand.

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Thomas Schroeder

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Technical Analysis

<ul>
<li>Copper's bull wedge b -wave breakout stands out (high conviction set up) but needs a weaker USD for follow through. China is the wildcard but seems a bit early still.</li>
<li>Gold trendline and price pivot at 1,700 the key level to clear or will retest the 1,620 triple lows. </li>
<li>DXY to rally off of 110 support within the triangle range and will see metals pullback. Bigger picture needs a break below 109.50 (bearish) to overlay with metals.</li>
</ul>


Copper's bull wedge b -wave breakout stands out (high conviction set up) but needs a weaker USD for follow through. China is the wildcard but seems a bit early still.
Gold trendline and price pivot at 1,700 the key level to clear or will retest the 1,620 triple lows. 
DXY to rally off of 110 support within the triangle range and will see metals pullback. Bigger picture needs a break below 109.50 (bearish) to overlay with metals.


United States

Copper is a chemical element with symbol Cu (from Latin: cuprum) and atomic number 29. It is a soft, malleable and ductile metal with very high thermal and electrical conductivity. A freshly exposed surface of pure copper has a reddish-orange color. It is used as a conductor of heat and electricity, as a building material and as a constituent of various metal alloys, such as Sterling silver used in jewelry, cupronickel used to make marine hardware and coins and constantan used in strain gauges and thermocouples for temperature measurement.

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Copper (COPPER COMDTY)

The Commodity Report #79

The world economy will be as weak next year as it was in 2009 after the financial crisis as the conflict in Ukraine risks becoming a “forever war,”...

The Commodity Report

The Commodity Report #78

The Rabobank issued a research note last week where they forecasted that prices for agricultural commodities like coffee, feed grains and oilseeds...

The Commodity Report

The Commodity Report #77

Fundamentally speaking, it was nearly a perfect week for commodities as much major news aligned during the week after China eased some Covid...

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The Commodity Report #76

As most commodity groups are heavily correlated with the ISM data, this will provide significant headwinds over the next six months or so,...

The Commodity Report

Copper Long Needs USD to Break Lower

Copper's bull wedge b -wave breakout stands out (high conviction set up) but needs a weaker USD for follow through. China is the wildcard but seems...

Thomas Schroeder

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