Commodities Facing Another Tough Year in 2018, JPMorgan Says

Oil Not Yet Ready to Breakout to $60, Says Baruch

Overall commodity returns have been lackluster this year, and face more poor performance in 2018, according to JPMorgan Chase & Co.

To make money, traders will need to pick assets, such as agriculture, and play short-term trends to take advantage of price swings, rather than buying and holding a broad basket of commodities, wrote analysts including John Normand in the bank’s outlook for 2018.

The Bloomberg Commodity Spot Index, a measure of performance that doesn’t account for rolling futures contracts, is up 5 percent in 2017 -- trailing returns in global equities.

JPMorgan’s forecasts for 2018 include:


  • Oil markets will stay balanced in 2018 due to extended OPEC-Russia production cuts. Brent crude will trade in the high $50 a barrel range.
  • “Aside from a revival in shale efficiency, the main downside risk is for an early and disorderly end to OPEC-Russia price support, potentially as producers refocus on market share”


  • JPMorgan recommends going long on aluminum. Copper and nickel supply will increase next year, leading to lower prices. 
  • Copper will average $5,700 a metric down in the fourth quarter of 2018, compared with a current price of $6,900.
  • Precious metals will be stable through mid-year and then move higher because of worries about a slowdown in economic growth. Gold will average $1,350 an ounce in the fourth quarter.


  • After a poor showing this year, agriculture could do well in 2018. JPMorgan says go long on Kansas wheat and sugar.
  • “The consumption-led recovery in Brazil should be supportive of feed grain and sugar demand in the leading agri exporter through 2018” 
  • Markets that are most likely to tighten include:
    • Cotton on strong consumption and Chinese imports
    • Corn because it’s most susceptible to production problems related to La Nina
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