Confused about Commodities
Caught up in the shutdown stalemate, not many would spare a thought for the commodity market except for the greedy idea that Gold will rally on market indecision and panic.
I did up the commodities charts and found some startling results.
All nice contangos with only WTI in backwardation.
I know, I know, they have designed super crops now and it will get cheaper in time and the cost of oil determines the production price of everything else. But there is one thing we mustn’t discount – the cost of labour.
Right now, we have massive mine protests in Africa and Bangladesh. They may be far away from the coffee plantations in Brazil but even Bangladesh is protesting.
As I write, I am reading some a nice FT article on Young Chinese shunning factories and labour intensive work, the World Bank downgrading China’s growth and CNA reporting President Xi of China declaring a controlled slowdown.
Citi wrote about the end of the commodity supercycle last month as Morgan Stanley and the rest came to the same conclusion, mainly on the taper news and the Chinese slowdown envisaged.
My mind draws a blank if you ask me.
That there should be a correction – yes. But global car sales are picking up led by China which uses 1/3 the global rubber supply. The oil shale business is going mass market with IPOs lined up and O&G etc companies in the SGX went bonkers till the Blumont debacle. And global farm land is still in hot demand as prices soar in places like Canada.
It doesn’t stand to reason, I am confused and I am still waiting for a crash to come so I can own some commodity other than gold.