Commodities Report: June 14 — June 18, 2021

Forecast Date: June 14 — June 18, 2021.

The market is almost half way through the year and 6-months into the new commodities super cycle following massive gains. The gains are expected to rise in the short-term necessitated by four major themes that has characterized the global markets trading landscape such as; low interest rate, rapidly surging inflation, massive stimulus and the global infrastructure spending boom.

Next week’s Federal Reserve meeting is one of the most anticipated global economic events that traders will not want to miss. The inflation is expected to increase from previous level, as the global economy gathers momentum after massive stimulus from the pandemic. However, the market dynamics remains risky and uncertain to position sizing.

Elsewhere, The Canada inflation rate hit 3.4%, representing the highest in a decade, the UK inflation more than doubled to 1.5% in April 2021 up from 0.7% in March 2021 while the Eurozone went up to 1.6% in April from 1.3% March levels. China’s inflation hit 9% in May from a previous high of 6.8% in the previous month.

The effect of rising inflation can be seen across commodity price movements. Last week, Oil prices surged upwards to $150 bbl/d, representing the highest high since October, 2008 marked during the global financial crisis with WTI hitting $70 bbl/d while Brent crude hitting $72 bbl/d. Lumber prices have quadrupled since the start of 2021, climbing 500% from the 2020 lows. The key driver of commodities asset rise remains inflation which has spurred significant demand for commodities with inflation-hedging abilities.

These are extraordinary times with great opportunities. Increased spending is expected including the big push to electric motor vehicles and green energy which will push up silver prices. More sell-off before the Nonfarm payroll building further position. Build further position after the release of Nonfarm payroll figure for copper. Take opportunity from expected break-out copper in the next coming days

Definition of Terms

bbl/d = barrel per calendar day.

WTI = West Texas Intermediate

Federal reserve meeting (day) is the day that the Federal Open Market Committee (FOMC) make an interest rate announcement. The meeting is scheduled eight times in a calendar year.

Redfox Analytica and Global Markets. https://www.linkedin.com/in/redfoxanalytics/