Commodity Crackles : Oil And Weather Elements
India is experiencing the world’s 5th deadliest heatwave with over 2 thousand dead and could well become the 4th deadliest if the death toll surpasses 2,541 which happened in India back in 1998. The deadliest on record would be France in 2003 where 71,000 deaths were recorded. http://www.voanews.com/content/india-suffers-worlds-fifth-deadliest-heat-wave/2802818.html
On the flip side, Texas is inundated by rain as the California drought drags into its 4th year of drought.
All this cannot be good for crops even as prices continue to plummet.
Major commodity prices agst USD
My view is that we should have found a base for agriculture as oil prices move into an uptrend as I had expected in April. https://tradehaven.net/market/commodity-crackles-lets-start-with-oil/
At this juncture, it is premature to say that oil prices have peaked although its been flat lining on low volatility for the past 5 weeks as open interest continues to grow.
WTI and Brent Crude Weekly Chart
Agriculture prices are impacted by oil as we all know, farming is energy intensive business.
With oil and the weather on our side, I have turned bullish on soft commodities and hope to see AIGA (ETFS Agriculture) back above US$6 in the coming months and optimistic on sugar futures as well.
AIGA LN ETFS Agriculture Weekly Chart
Wish me luck !
Based on historical precedents, El Nino will drive up commodity prices generally.
I suppose the key risk is the pace of the USD strengthening?
But the curve will just go backwardation. So buying those medium term ETFs may not give the profits that spot prices give.