Is there delusion in the copper market? // Commodities continue to mean revert // Resilient Bitcoin Welcome to another 64 people who subscribed to the Commodity Report during the last week, bringing the total subscriber count up to 2.649. Is there delusion in the copper market? Inventories of copper in warehouses run by exchanges such as the LME do not provide a complete picture of copper stocks in the supply chain since many industrial users will hold their own reserves of the metal. But visible stocks can have a significant influence on sentiment in the market. It’s just striking how negative the financial markets are about this industry, yet the physical market is so tight. The general macro view is very disconnected from the underlying physical fundamentals of the copper

OPEC+’s big surprise / First the Rhine now the Mississippi River / Chinese Oil Demand is trending down The benchmark, CRB Commodity Index, ended the week +6,5% higher Welcome to another 99 people that subscribed to the Commodity Report during the last week, bringing the total subscriber count up to 2.418 people! OPEC+’s big surprise The group announced to cut its output limits of as much as 2 million barrels a day, using current targets as a starting point. While a significant reduction, the impact on global supply will be much smaller because several countries are already pumping below their quotas. Most analysts expect that the real supply cut will be around 700 to 800 bpd. Nevertheless, this is still a large supply cut. No wonder prices were trending higher during th

The oil crisis will only become worse // Shipping rates continue to decline // USD Sentiment CheckThe benchmark, CRB Commodity Index, ended the week -0,1% lowerWelcome to another 93 people that subscribed to the Commodity Report during the last week, bringing the total subscriber count up to 2.319 people!The oil crisis will only become worse (in 2023)We expect the oil crisis to worsen once economic activity resumes again. Till then some months will probably pass. Nevertheless, the industry hasn’t increased production significantly enough, and the SPR release by the Biden administration veiled the actual grim picture in the oil market.Those stories from Bloomberg show how relaxed the sentiment seems to be again. I have the feeling that this sentiment won’t age well at&nb

About soybeans, pork meat and wheatThe benchmark, CRB Commodity Index, ended the week 3,7% lowerWelcome to another 44 people that subscribed to the Commodity Report during the last week, bringing the total subscriber count up to 2.226 people!China’s soybean shortageAt the beginning of the week, China was redoubling its efforts to bolster food security by trying to cut the amount of soybeans that get turned into animal feed. China is by far the world’s biggest importer of soybeans, which account for the bulk of its consumption. A lower ratio would of course mean fewer soybean imports needed as demand would somehow decline a bit.On Friday Bloomberg reported that China is facing a soybean meal shortage, at least in the short term, with prices of the feed ingredient so

Big Rail Strike Averted // Inflation stays sticky after all — markets panic // & more The benchmark, CRB Commodity Index, ended the week 1,8% lower Welcome to another 115 people that subscribed to the Commodity Report during the last week, bringing the total subscriber count up to 2.182 people! Big rail strike averted Probably the best news of the week was that a rail strike in the US was averted after both parties agreed on a deal including higher wages and benefits for rail workers. The deal includes a 24% wage increase over five years, including 14,1 % effective immediately as well as five annual $1.000 payments, according to the National Carriers’ Conference Committee. According to the Bureau of Labor Statistics, there are currently 150.000 people working in the

Rice stays pricy // European Gas Price Update // Yuan & Commodity Correlation // & more The benchmark, CRB Commodity Index, ended the week -0,1% lower Rice prices stay near highs India, the world’s biggest rice shipper, restricted exports of key varieties that mainly go toward feeding Asia and Africa. India imposed a 20% duty on a variety of rice varieties. Keep in mind that Asia is producing and consuming about 90% of the global supply. India alone is the world’s most important exporter with a share of 40%. The curbs apply to roughly 60% of India’s overall rice exports, according to Bloomberg. Therefore it’s no surprise that the forward contract of rice is still trading near all-time highs, as this step should also keep US prices for rice on elevated level

Fertilizer & Gas crisis // Decarbonization in the Shipping Industry // Dollar weakness ahead & moreThe benchmark, CRB Commodity Index, ended the week 2,4% higherFertilizer & Gas crisisWhile natural gas made a higher high, the fertilizer complex remained in a sideways market for some time. Last week fertilizer prices saw an awakening, as especially European natgas prices rallied further. US Gulf Urea futures jumped 20% while Middle East Urea futures jumped 18% w/w.In The Kuemmerle Report, I explain how these developments influence commodity prices and where the best setups are.Meanwhile soaring gas prices have crippled Europe’s fertilizer industry massively, with output cuts lea

The benchmark, CRB Commodity Index, ended the week 2,5% higherThe energy was once again the biggest winner of the week. Natgas touched the 9$ mark for the first time since 2008!Metals were once again on the winning side, as Realyields slipped slightly. Grains and Softs were both mixed, but we have to talk about Oats and Coffee, as they both rallied hard over the week. The liquidity-driven asset crypto was also down.Oats catch a bid (again)I’m a big believer in a long-term oat bull market, simply because demand especially from younger generations just keeps growing and on the other side production stays limited, especially as Russia is also a big producer of oats. Nevertheless, the two most important exporters are Canada and Finland, accounting for as much as 60% of all export volume.From a

The benchmark, CRB Commodity Index, ended the week 1,3% higherThe energy sector was mixed. While refined oil products were correcting, crude was unchanged, only natgas was strong over the week.Metals were the strongest sub-sector over the week.Grains were mostly unchanged. Soybeans and Meal put in a solid performance but talked about those two in The Kuemmerle Report.Softs were mixed as well, with Orange Juice and Sugar Nr.1 on the winner side. Crypto was modestly lower.BTW The Commodity Report just turned 1!Here I just want to say thank you for all the tremendous love and feedback the community is giving me so far on this journey. My goal is to provide the most practical commodity trading research out there. This will also be the aim over the next year. Thanks guys! BTW If you would like

The benchmark, CRB Commodity Index, ended the week -0,9% lower.The energy was mixed with gasoline up and natgas down. The volatility in the energy sector remains huge, but the momentum remains strong.Metals were all lower while Realyields surged further and economic momentum seems to slow down further and further.Grains were mixed with wheat as the biggest winner after the latest WASDE report was getting published on Thursday (I cover the topic in The Kuemmerle Report)Softs were mixed as well, many commodities here are consolidating, while orange juice broke out to the downside. Last but not least it was a horrible week for crypto. BTW If you would like to see more commodity and macro content like this - consider following me on Twitter @lukaskuemmerle Here are my latest observations:Liqui

The benchmark, CRB Commodity Index, ended the week 1,0% higher.The energy sector was strong again, despite a larger correction in natgas futures on Friday. Moreover, energy was the only part of the commodity sector that was broadly up over the week. Grains, metals and softs traded mostly all lower over the week.10Y Realyields ended the week positive again for the first time since January 2020. Crypto performed pretty badly as financial conditions continued to become tighter at a rapid pace.BTW If you would like to see more commodity and macro content like this - consider following me on Twitter @lukaskuemmerleHere is my latest playbook:Food prices declined a tad during AprilThe FAO Food Price Index showed a deceleration in food price inflation during April. But this was kind of the expecta

The benchmark, CRB Commodity Index, ended the week 1,3% higher.Energy had another extraordinary week, while refined oil products seem to outperform the basis crude oil product. Natgas also recovered quite strongly. Metals were weak and continued their downtrend. Grains and Softs were mixed and driven by their own market dynamics. Crypto was down again, driven by tighter financial conditions, a trend that should continue as well.Here is my latest playbook:Realyields at the brink of turning positive again10Y Realyields ended the week at -0,03% and could soon turn positive again for the first time since January 2020. Here you can see the correlation between Realyields and the CRB commodity index. We can say that there isn’t a significant correlation between both. What we can say is that

During the last weeks, I got many questions about how I judge the forward curve of commodities, as well as the importance of contangos and backwardation. So here is what I’m looking for in the forward curve.Let’s start with a simple definition of both forward curve structures: Contango and backwardation are terms used to define the structure of the forward curve. When a market is in contango, the forward price of a futures contract is higher than the spot price. Conversely, when a market is in backwardation, the forward price of the futures contract is lower than the spot price. Generally speaking, market participants view a backwardation as a bullish sign for the market. That’s simply because buyers are ready to bid a higher price to get earlier delivery and therefore a sign of strong und