Data-Driven Commodity Research, The Commodity Report

The Commodity Report

Data-Driven Commodity Research

A unique newsletter about commodities and macro analysis in a weekly format.

Commodities

<ul><li>As of today, we’re still short cotton, but we see a major potential reversal pattern brewing in the market.</li><li>A worsening economic outlook provided major headwinds to the price of cotton during the past few couple of months.</li><li>Overall, the market has corrected more than 50% since Q2 of 2022.</li></ul>

As of today, we’re still short cotton, but we see a major potential reversal pattern brewing in the market.A worsening economic outlook provided major headwinds to the price of cotton during the past few couple of months.Overall, the market has corrected more than 50% since Q2 of 2022.

Major Cotton Reversal Trade / Potential Investment Case

<ul><li>Gold Anomaly As Warren Pies wrote in a post last week, the current performance of Gold is really an anomaly, both plotted against TIPS and the USD-Index.</li><li>This anomaly once again highlights the importance of thinking of gold as a liquidity hedge - it is not primarily an inflation hedge or always highly correlated with the USD or inflation expectations.</li><li>Warren wrote that 2024 (and also currently) is the fifth calendar year with positive 10y TIPS yields and positive gold returns (2005, 2006, 2008, 2023).</li></ul>

Gold Anomaly As Warren Pies wrote in a post last week, the current performance of Gold is really an anomaly, both plotted against TIPS and the USD-Index.This anomaly once again highlights the importance of thinking of gold as a liquidity hedge - it is not primarily an inflation hedge or always highly correlated with the USD or inflation expectations.Warren wrote that 2024 (and also currently) is the fifth calendar year with positive 10y TIPS yields and positive gold returns (2005, 2006, 2008, 2023).

<ul><li>The Investmentcase for Gold Some time has passed since I wrote the last time about gold.</li><li>Currently, a situation is developing that could become interesting for investors in the shiny metal.</li><li>While till this day many market experts have the opinion that the gold price is highly correlated to the US-Dollar as well as the relative trajectory of where yields are headed, I think that gold is primarily driven by liquidity conditions.</li></ul>

The Investmentcase for Gold Some time has passed since I wrote the last time about gold.Currently, a situation is developing that could become interesting for investors in the shiny metal.While till this day many market experts have the opinion that the gold price is highly correlated to the US-Dollar as well as the relative trajectory of where yields are headed, I think that gold is primarily driven by liquidity conditions.

Crude Palm Oil Active Contract / Commodities

<ul><li>Hedge Funds Pushing into Commodities Markets Big trading houses like Glencore, Trafigura, Mercuria or Vitol are benefiting since years now from the increasing fluctuations on the commodities markets.</li><li>This trend increased, especially since crude oil went negative when the Covid pandemic started and was followed by further volatility since the macro environment became even more fragile with the war in Ukraine and now the conflicts in the Middle East.</li><li>According to Ney York based consulting firm Oliver Wyman, the gross margin of trading houses amounted to 105 billion dollars in 2023.</li></ul>

Hedge Funds Pushing into Commodities Markets Big trading houses like Glencore, Trafigura, Mercuria or Vitol are benefiting since years now from the increasing fluctuations on the commodities markets.This trend increased, especially since crude oil went negative when the Covid pandemic started and was followed by further volatility since the macro environment became even more fragile with the war in Ukraine and now the conflicts in the Middle East.According to Ney York based consulting firm Oliver Wyman, the gross margin of trading houses amounted to 105 billion dollars in 2023.

Hedge Funds Pushing into Commodities Markets

Founder, Market Thinker

Mark Tinker

Founder

Market Thinker

Mark Tinker has over 35 years experience as an investor, market strategist and economist. Having spent more than 20 years as a sell side strategist and being top rated on numerous occasions and surveys he moved to investment management in 2006 to run global equity portfolios in London and subsequently moved to Hong Kong in 2013 to help establish an Investment Management business for a top 20 international asset manager. He first started writing investment weeklies for his employers in 1989, developing a style characterised under the title Market Thinking and has been a regular commentator and presenter on CNBC, Bloomberg and other business channels, where his approach of rationalising market behaviour rather than making short term predictions on high frequency market data provides a welcome balance to his client audience.

Making Sense of the Narrative

Macroeconomics

<ul><li>This week’s ‘CPI Print’ has caused something of a panic in the bond markets and has left the ‘Pivot’ Pundits struggling versus the ‘No Cuts’ crowd, some of whom are now doubling down and even talking about rate rises.</li><li>Traders in other markets are looking across with some degree of concern, long wary of the ability of the bond markets to trigger problems elsewhere.</li><li>So too are the politicians, keen for their particular narrative on the economy to win them votes, but concerned that they need the markets (and by extension the Fed) to support their cause.</li></ul>

This week’s ‘CPI Print’ has caused something of a panic in the bond markets and has left the ‘Pivot’ Pundits struggling versus the ‘No Cuts’ crowd, some of whom are now doubling down and even talking about rate rises.Traders in other markets are looking across with some degree of concern, long wary of the ability of the bond markets to trigger problems elsewhere.So too are the politicians, keen for their particular narrative on the economy to win them votes, but concerned that they need the markets (and by extension the Fed) to support their cause.

United States

Gold is a chemical element with the symbol Au (from Latin: aurum) and the atomic number 79. In its purest form, it is a bright, slightly reddish yellow, dense, soft, malleable and ductile metal. Chemically, gold is a transition metal and a group 11 element. It is one of the least reactive chemical elements, and is solid under standard conditions. The metal therefore occurs often in free elemental (native) form, as nuggets or grains, in rocks, in veins and in alluvial deposits. It occurs in a solid solution series with the native element silver (as electrum) and also naturally alloyed with copper and palladium. Less commonly, it occurs in minerals as gold compounds, often with tellurium (gold tellurides).

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Gold (GOLD COMDTY)

Major Cotton Reversal Trade / Potential Investment Case

A worsening economic outlook provided major headwinds to the price of cotton during the past few couple of months. Overall, the market has...

The Commodity Report

Gold Anomaly

Gold Anomaly As Warren Pies wrote in a post last week, the current performance of Gold is really an anomaly, both plotted against TIPS and the USD...

The Commodity Report

The Investmentcase for Gold

The Investmentcase for Gold Some time has passed since I wrote the last time about gold. Currently, a situation is developing that could become...

The Commodity Report

Hedge Funds Pushing into Commodities Markets

Hedge Funds Pushing into Commodities Markets Big trading houses like Glencore, Trafigura, Mercuria or Vitol are benefiting since years now from the...

The Commodity Report

Gold and Goldilocks

This week’s ‘CPI Print’ has caused something of a panic in the bond markets and has left the ‘Pivot’ Pundits struggling versus the ‘No Cuts’ crowd,...

Mark Tinker

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)