Yeah we know that commodities are suffering with a Strong U.S. Dollar, no China bid, oversupply... Tell me what I don't know.

commodity-etfThe CRB is another -1.4% today with Brent (BNO, quote) -4.5%, Copper (JJC, quote) -1.55%, and the list goes one. If you look at chart of the CRB Index (commodity benchmark) it has now traded all the way down to the base formed after the worst financial crisis of all time.

Interesting to note that this level of 220 on the index, is also the same level where the index was to where we started the brunt of the commodity super-cycle run in 2002-03.

So commodities are trading at the same level now as they did back in 2002 when global GDP was about $30 trillion USD and yet global GDP today is closer to $72 trillion USD. Think we are oversold?

Meanwhile the world will still consume over 92 million barrels of oil (USO, quote) per day in 2015 up from 89 million in 2012. No matter what happens with natural gas (UNG, quote) and renewables, oil demand will grow 1.5%+ on average until 2030. We know the world is oversupplied with oil but how about misreading demand?

Just because there is a supply reaction (there ALWAYS is) in the commodity space, doesn't mean the world is getting smaller or less populous or less energy dependent.

We are NEAR or AT cash production costs in oil, ore, and other bulks as well as ags and soon this will be the ultimate market for how low commodities go.

 

 

 

 

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