Asian central bankers grappling with wobbly markets, higher energy costs and simmering trade tensions are getting relief from an old foe: food prices.
The science may be esoteric, but petrochemicals are big business in the oil-rich Persian Gulf, and they’re poised for further growth.
In the wider scheme of investing and market performance, the 2018 commodity recovery to May 31 is a rounding error -- it promises to gain significance.
Divergent strength in April-May is a key takeaway as metals enter the summer. Despite the strongest two months for the dollar in almost two years, metals have simply marked time, backing up into good support levels.
Knocked around by trade tension as the Northern Hemisphere enters growing season, the grains, comprising the majority of agricultural commodities, should come out with higher prices.
Absent further geopolitical risk, the energy bull appears past its prime, with crude oil-led prices signaling a May peak and underlying dynamics favoring a natural-gas rally.
Commodities were a big casualty of the escalating trade war between the U.S. and China, but are now set to be a major beneficiary of Beijing’s pledge to import more American goods.
The combination of torrid U.S. production, refiners' shale-processing-capacity crunch, infrastructure bottlenecks and exponential yet limited export growth is depressing domestic prices and widening the WTI-Brent spread to levels not seen since 2015.
While value-centric investors are hyper-focused on capital discipline even as oil prices rally, E&Ps are keeping an eye on production growth.
Looking at supply is crucial for understanding crude, but it’s not everything. Right now, the strength of China’s demand may be the most underappreciated story in the market.