While the Jury remains out on the situation in China, it is our opinion that most commodity markets have become too bearish toward near-term demand prospects and the global economy.
China
Chinese Commodity Price Trends; Overblown Concerns
Make no mistake: The ebb and flow of Chinese physical commodity demand remain paramount to commodity price trends! Clearly Chinese growth has slowed, and clearly there has been an added fear of credit turmoil inside of China with their recent bond failure.
Is the US Economy Slipping Back?
While Treasury and gold prices seem to think that the US economy is slipping back into a slow or no-growth posture, the odds are good that economic activity was merely crimped by one of the coldest and snowiest winters on record.
Tell-tale Signs of an Improving Global Economy
The price action in many physical commodities over the last two months has been very impressive, and that action is indicative of a global economy that is waddling its way toward recovery.
Overall Uncertainty Continues to Decline
The overall outlook for commodities is slightly improved from last week’s dismal view. Clearly the US economy has remained suspect in the wake of the second disappointing Non-Farm Payroll result in a row.
Recent Concern For the Pace of US Recovery
Looking at the action in stocks last week, we might develop some concern for the pace of the US recovery, especially in the wake of a soft December Non-Farm Payroll result, sub-par sales guidance from a couple of bellwether US companies and from fears that the Fed might continue to taper even in the face of uneven US data.
Widespread Confusion Over Global Outlook
Over the last two weeks, the outlook for the global economy has fostered some widespread confusion. The December US Non-Farm Payroll gain was clearly disappointing, but that news was countervailed by increased attention on the decline in the US unemployment rate.
The Origin and Evolution of the Commodity Futures Market: Part II
Over the course of 175 years, the city of Chicago has defied the odds and emerged as a major player in the global market. From Al Capone to the current President of The United States, from the 1893 Chicago World Fair to this past summer’s NATO convention, Chicago is a global city of past, present… Read more.
The Collar: The Bread and Butter Option Strategy for Hedgers
Many believe that we are in a golden age of farming in this country. Since the summer of 2006, we have seen grain prices move in a big range, both up and down. These price fluctuations combined with below trend yields, new markets (such as China) becoming more willing buyers, and other policy factors have… Read more.
Futures Spread Trading: The Anatomy of a Classic Corn-Wheat Spread
Why do some traders prefer to spread trade versus trading outright futures contracts? The contracts often selected by the trader may be typically trading parallel to one another giving the trader only the “differential” moves between the two contracts. One may take any two markets that they observe have differentials between the price movement and… Read more.
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