April has been a month of turmoil for the commodities universe. While we had expected movements in gold, silver and ags, the sharp falls for cycle-driven commodities are worrying.
The increased trading volumes last week indicate a market that is witnessing an asset class change, out of commodities into something else, rather than a change in fundamentals. The fresh fundamental news last week was more bullish than bearish for the commodities universe. That said. it is unwise to stand in front of a train. Trading conditions are likely to remain choppy in the near term, but we would think any further price weakness in base metals and crude oil will be treated as a buying opportunity, both by macro and trade players, as those who are now playing from the short side are running out of steam.
Copper finished last week below the psychologically important USD 7,000 level. Another dip lower would appear to be on the cards, as concerns about China's growth and weaker US indicators add their weight. Copper is still trading far above its marginal cost of production, meaning that few are willing to play from the long side yet. A guesstimate is that the market will now target the 2011 low of USD 6,640 before buyers re-emerge. And if the USD 6,635 mark does not hold… well remember what happened to gold…
April har skakat om råvaru-universet ordentligt. Förra veckans nyhetsflöde var mer positivt än negativt för råvarorna. De höga handelsvolymerna vittnar därför om flöden ut ur råvaror och in i andra tillgångsslag, snarare än en förändrad fundamental verklighet. Med det sagt så är det klokt att inte stå i vägen för ett tåg. Handeln kommer säkert fortsätta vara volatil. Vi tror att både makrofonder och traders kommer att se fortsatta fall i basmetaller och olja som köplägen från nuvarande nivåer.
Koppar slutade förra veckan under den psykologiskt viktiga 7000 USD nivån. En ny dipp ligger säkert i korten när osäkerheten kring kinas tillväxt sprider sig och USA makor börjar darra. Koppar handlas fortfarande klart över produktionskostanden och få vågar gå långa. Dagens bästa gissning är att vi faller ner till de förra bottnarna från 2011 på 6640 USD före köparna återvänder.
Wishing all of our readers a happy and healthy 2013! We would like to start off the new year by reflecting on some of the highlights of 2012.
Movement of the year: Iron ore's drop of 42% followed by a recovery of 66%
Feat of the year: Twelfth year in a row of increasing gold prices
Topic of the year: To call for the end of the commodities' super cycle
* tris= three, kai= and, deka= ten, phobia= fear