Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Terminal Terminal Bloomberg Bloomberg Commodity Index (BCOM) Indices Indices At the Fork In the Road
‒ At Stock-Bond Fork in the Road, Commodities Set to Follow Yields ‒ Broad Commodity-Bear Fuel Is Diminishing for 2020, Next Decade ‒ Energy Paradigm Shift to Pressure Prices in 2020, Next Decade ‒ Gold Is Ripe to Join the New-Highs Club With Equities, Greenback ‒ Dead-Cat Bounce Risks Elevated -- Copper and Industrial Metals ‒ Lower Prices Set to Be Cure for Low Ag Prices Next Year, Decade
CONTENTS
02 Broad Market Outlook 04 Energy 07 Metals 14 Agriculture
DATA 18 Performance 22 Curve Analysis 25 Market Flows 28 Performance 1 Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
Data and outlook as of November 30 Learn more about Bloomberg Indices Mike McGlone – BI Senior Commodity Strategist BI COMD (the commodity dashboard)
Note ‐ Click on graphics to get to the Bloomberg terminal At Stock-Bond Fork in the Road, Commodities Set to Follow Yields Broad Commodities Vs. EM Equities, Bond Yields Performance: Nov. -2.6%, 2019 +2.5%, Spot +5.2%. (Returns are total return (TR) unless noted) (Bloomberg Intelligence) -- The relatively elevated positioning of crude oil prices at the end of 2019 vs. last year should be a primary commodity pressure point in 2020. Our bias for the most significant commodity remains negative, but favorable for gold. There are green shoots in depressed agriculture prices, and broad metals should continue to shine in the next decade. A peak greenback is a prerequisite to advance dollar-denominated commodity prices. Limiting the trade-weighted broad dollar (at all-time highs at the end of November, despite declining U.S. bond yields) will be necessary for broad commodity-price appreciation.
Commodities should continue to succumb to the pull lower from bond yields. Mean-reversion risks favor historically low commodities vs. high stock-market prices. Mean Reversion Potential Favors Commodities. Broad commodity-price upside potential tilts favorably vs. downside mean-reversion risk in the U.S. stock market and Looking Forward dollar, if history is a guide. Our graphic depicts the worst 10- year return for the Bloomberg Commodity Spot Index near
the end of 2019 vs. the best for the dollar and S&P 500 in Broad Commodity-Bear Fuel Is Diminishing for 2020, about two decades. Looking ahead to 2020 and the next Next Decade. Unfavorable commodity trends from the past decade, commodity prices are gaining tailwinds vs. the 10 years are set to prevail in 2020, but prices will gain in unlikely potential for sustaining the velocity of equity-market relative value into the next decade, in our view. The strongest and greenback appreciation. U.S. stock market and dollar 10-year returns in about 20 years are unlikely sustainable, favoring moribund commodities. Hard to Get Much Worse for Broad Commodities
Commodities Set to Continue Following Yields. The downtrend in commodities the past 10 years should prevail in 2020, but we think the foundation is in place for better relative performance in the next decade. Since the end of 2009, the Bloomberg Commodity Spot Index is essentially on par with the MSCI Emerging Markets Index (EM). Commodities are down about 6% vs. up 6% for EM at the end of November. Our graphic depicts a wide disparity in commodity prices vs. plunging bond yields. The key question is how much worse conditions will get for broad commodities. Despite a decade of disinflation, as measured by the drop in Treasury 30-year yield to 2% from about 5%, spot commodities are essentially unchanged. The spot BCOM is about 0.73 correlated to EM since 2009 A primary companion of the strong greenback -- and on an annual basis, about the same as the broad index is therefore a headwind for commodities -- is about a 180% 10- related to crude oil. year rate of change in the S&P 500, its best since 2000. The same measure of the trade-weighted broad dollar near 30% was last exceeded in 2003. Not since 1998 has the BCOM declined more than 5% on a 10-year basis.
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Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
Commodities Need the Dollar to Stop Rocking. Dollar- Our performance board depicts the advancing dollar as a denominated commodities face a brighter next decade, with primary commodity-price headwind. Gold is the divergent- limited upside in the dollar, in our view. Advancing rapidly to strength standout. Up almost 15% in 2019 despite the 2% all-time highs in 2019, the strong greenback has been a gain in the trade-weighted broad dollar indicates the metal is primary commodity pressure for most of the past decade. on solid footing for further advancement. Our graphic depicts the ratio of the Bloomberg Commodity Spot Index vs. the S&P 500 nearing the end of November at Commodities at Risk to Stock-Market Reversion the lowest since 2001, the year the trade-weighed broad dollar last peaked. The trend in the ratio is down but appears unsustainable, if history is a guide.
When Dollar Drops, Commodities to Come Knocking
SECTOR PERFORMANCE
Gold's Positive 2019 Set to Prevail in 2020. Precious metals are likely to lead commodity returns into 2020. Our
outlook for gold remains favorable, with 2019 the first year of Newer technologies are increasingly driving the U.S. stock a breakout following five years of range-trading and the market. A strong dollar is a key companion, which pits metal showing divergent strength vs. the dollar. The potentially bottoming commodities in the unique position of landscape isn't as good for most other metals and crude oil, being subject to peaking equity prices. at least in the near term. A dollar peak will be necessary for industrial metals to turn bullish. Copper consolidating at last year's lows and the likely expended nickel rabbit are negatives. MACRO PERFORMANCE Precious Upside Momentum vs. Energy Downside Gold Stud, Copper Dud Set to Prevail in Commodities in 2020. There's greater potential to sustain predominant trends in commodities in 2020, as we see it, favoring advancing gold. Energy continuing to give back 2016-17 gains into next year is likely, with added risk vs. some stock- market mean reversion. Copper is down about the same percentage that gold is up on a two-year basis and appears to be an entrenched trend.
Broad Commodities Held Up by Equity String. The increasing disparity between advancing U.S. stocks vs. broad commodity prices elevates the latter's decline risks when Dead-cat bounce remains our takeaway in energy, with the equity returns normalize, in our view. Up only about 3% in sector set to continue giving back 2016-17 gains in 2020. 2020 at the end of November, the Bloomberg Commodity Fundamentally and technically, agriculture is tipping Total Return Index performance disparity vs. 28% in the S&P favorably, with one key caveat for a price bottom -- a dollar 500 is disconcerting. If the stock market mean-reverts a bit, peak. we think commodities will decline with a greater beta. A primary support for commodities this year -- crude oil ending last year near good support -- is diminished for 2020.
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Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
Decarbonization, Technology, GDP and Weak Crude Energy (Index weight: 29% of BCOM) Performance: Nov. -2.6%, 2019 +4.6%, Spot +5.2% *Note index weights are the 2018 average.
The Past Decade Is A Guide
Energy Paradigm Shift to Pressure Prices in 2020, Next Decade. Crude oil and natural gas prices will maintain the downward bias of the past 10 years into the next decade, as we see it. The key bullish factor that crude oil had going for it in 2019 -- ending 2018 near support -- is the opposite for 2020. West Texas Intermediate should have limited upside above $60 a barrel absent some combination of sharp OPEC Propped Up by Stocks: Crude Oil vs. Positions. Get-me- cuts and sustained stock-market strength. The energy sector out remains the state of hedge-fund positioning in crude-oil is a prime example in commodities of technology, futures. Exiting overweight long positions from last year demographics and sentiment (decarbonization) advancing remains the primary action and appears set to persist. Our much more rapidly than demand. graphic depicts the rapidly declining 52-week average in petroleum futures managed-money net positions. What's Carbon-based energy is increasingly being replaced. OPEC significant is that this measure has declined to well below the helped to spark the transmogrification by boosting prices halfway mark of the 2016-18 bull market, yet prices remain and faces a losing battle. A primary determinant of higher above the same measure. prices in 2020 will be if OPEC can sustain deeper cuts. It's unlikely, in our view. Crude Oil Appears Elevated vs. Net Positions
Oil Bear Market Navigation
Crude Oil and Energy Vulnerable Nearing Upper-End of Price Range. The opposite positioning at the end of this year vs. last is a primary headwind for crude oil prices in 2020, in our view. Sustaining above $60-a-barrel West Texas Intermediate will be more difficult than about the $40 level at the end of 2018. Dependence on supply cuts and higher equity markets for advancing oil prices is indicative of a bear market.
Crude Oil Is Caged; Breakout Risks Downward. Next year, crude oil prices will be limited by this year's highs and lows, Divergent strength may be a takeaway, but we're more in our view. Some combination of enduring OPEC cuts and concerned that a primary reason prices haven't followed accelerated stock-market strength should be necessary for positions lower is the record-setting stock market. Based on WTI to maintain prices above the 2019 closing high of $66.30 autoscaling, positions are equivalent with the West Texas a barrel. The 2019 advantage of ending 2018 near a two-year Intermediate crude oil price closer to $40 a barrel vs. about low is gone, tilting price risk to the downside. The $46.54 $57 on Nov. 20. If the stock market declines, oil should follow bottom from the first day of 2019 represents good support. -- only faster. Our graphic depicts the bigger picture of relatively elevated crude oil prices vs. global economic growth. Crude Oil Depends on Higher Stock Market. Crude price
risks are tilted to the downside, notably due to its precarious Incremental oil demand should continue to slip relative to relationship to the stock market, in our view. Absent an GDP, reflecting better technology, demographic shifts and unexpected and unlikely reversal in unfavorable demand vs. decarbonization trends. Lower prices may be the primary conditions, oil prices need more fuel from advancing equities force to limit supply. Dollar-debasement is a wild card for a to keep from declining. Crude oil, which has traditionally potential price boost. been uncorrelated to equities, has become highly dependent. Our graphic depicts the historically elevated 52- week crude-to-S&P 500 beta approaching last year's all-time
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Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM) high at about 1.7x. Until 2008, the annual crude oil-to-S&P U.S. Fuel Paradigm Shift Set for October. Crude oil prices 500 beta was minus 0.1x. have been heading lower and we don't foresee a force powerful enough to reverse it. Based on the latest Energy Crude Oil Being Supported by the Stock Market Department estimates, the dream for U.S. energy independence since the Carter administration will occur in October. Our graphic depicts imports of liquid fuels shifting to exports by Halloween. Price spikes on the back of geopolitical events should only accelerate this trend. Crude Oil Greater Risk Is Revisiting 2016 Low
A primary question for crude-oil bulls is how sustainable is the record-setting stock market. If the S&P 500 were to revisit the halfway mark of the rally since last year's lows, WTI would risk revisiting $40 a barrel, on a volatility-weighted basis.
Crude Oil Is a Big Fan of Increasing Equities. Crude oil is at similar risk of a price plunge as in 2014, in our view, and In 2018, net imports averaged a bit less than 1 million barrels greater dependence on the stock market adds vulnerability. a day. The estimate for this year is about 500,000 barrels of Our graphic depicts the 10-year annual correlation of WTI exports, and triple that in 2020. Absent some form of crude to the MSCI Emerging Markets Index; it's been about sustained supply disruption, notably from the Middle East, 0.8 since 2012. Before 2000, the same measure was crude oil is entering a near-perfect storm for lower prices as negative. Prices have diverged since the crude-oil decline incremental demand is also in decline. five years ago, which emphasizes the elevated risks to energy prices if the stock market slides. Growing Non-OPEC Oil Supply to Outpace Demand. Contributing Analysts Henik Fung (Energy) Crude Oil Appears on the Cliff's Edge Global crude supply could climb to 3 mmbpd in 2020, we estimate. U.S. shale oil output is rising, while Norway resumes production after a brief slump. These will drive up supply, despite steady demand at 1.2 mmbpd, according to International Energy Agency (IEA) estimates, which we believe may be overly optimistic. A supply-demand imbalance would compel OPEC and allies to announce deeper cuts during meetings on Dec. 5-6 and March 2020, supporting oil prices in six months' time.
Non-OPEC Oil Supply Growth in 2020
We see similar annual crude-oil patterns in 2018-19 as in 2011- 13. Attempts at higher prices failed on the back of unfavorable demand vs. supply conditions. An initial WTI target support is $40 a barrel, notably if the EM index gives back some of this year's gains of about 11% to Nov. 18.
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Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
Peak Oil Demand Envisioned Within 10-15 Years Natural Gas Price May Chill to Under $2 Contributing Analysts Rob Barnett & Salih Yilmaz (Energy) The majority of respondents to our survey (66%) expect global oil demand will peak before 2035. This timeline is a bit more subdued compared with our previous survey in June -- at that time, 60% of respondents expected demand to peak by 2030. Two recent high-profile reports from the International Energy Agency and OPEC have probably influenced sentiment on this topic: IEA's 2019 World Energy Outlook, which was published Nov. 13 predicted global oil demand would plateau by 2030. And OPEC's recent World Oil Outlook forecast demand growth through 2040, though at a slower pace than previously envisioned.
When Will Global Oil Demand Peak?
A potential sign of demand increasing vs. supply is the relatively flat curve vs. five years ago, but futures hedging to offset rapidly increasing supply is likely bringing back some past days of normal backwardation.
Deja Vu Risks in Natural Gas Point Downward. U.S natural gas is in the process of resuming the 2014-15 bear market, in our view. What's changed is supply increasing even more rapidly. Some form of substantial, sustained increase in demand should be needed to relieve the price pressure, but we think that's unlikely. Our graphic depicts the 24-month Particularly in developed economies, we believe policies that rate of change in Department of Energy natural gas support energy efficiency and vehicle electrification will be production at over 24% -- the greatest in the database since headwinds for oil demand in the years ahead. 1973. Coming on the back of last year's short-covering price- spike puts the market in a similar bearish condition as the
aftermath of the price surge five years ago. Natural Gas - Enduring Bear Unprecedented Supply Sustains Natural Gas Bear Better Get Used to It: Natural Gas Supply Well Ahead of Demand. There's little to change the past 10 years' theme of rapidly increasing natural gas supply in 2020 and the next decade, in our view. The U.S. benchmark is more likely to continue chilling toward $2 per MMBtu than sustain above $3. Technological innovation and U.S. supply should remain the predominant forces.
Natural Gas Set to Resume Broad Bear Market. Absent an unusually cold winter, we see U.S. natural gas resuming the bear market since the 2005 peak and revisiting $2 support. Our graphic depicts a similar hangover pattern from last year's spike as the aftermath of the 2014 winter-chill price spurt. Prices bottomed in 2016 at $1.64 per MMBtu, a 21-year low. The 52-week average of natural gas managed-money net positions appears in early days of declining from records That hangover led to a 17-year low about two years later. The (database dates to 2006). It's a bear-market foundation. 2016 low close of $1.64 per million BTUs is at risk of breach, Covering rallies may result from more recent elevated net based on history. Elevated hedge-fund shorts are supporting shorts, but should be fleeting and limited toward $3. prices in the near term, but that shouldn't last.
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Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
Global LNG Market Endures Glut, Price Pressure: 2020 Front Energy Futures to November 30 Outlook Contributing Analysts Talon Custer (Energy) & Elchin Mammadov (Utilities) THESIS: The global liquefied natural gas industry faces a challenging 2020, in our view, as a spate of new liquefaction projects come online, exacerbating a supply glut and maintaining pressure on LNG spot rates. A potentially mild winter and elevated gas storage levels present further risks to pricing, but we don't expect U.S. shut-ins. Europe's ability to again soak up additional LNG volume and growth in China will be crucial. Global demand is still expanding in utilities, industrial and residential sectors, a trend that we expect to persist for several years.
The longer-term outlook remains favorable, in our view, with global policy changes focused on limiting high-sulfur products, accelerating LNG adoption. Investment across the supply chain is robust, with record final investment decisions (FIDs) made this year and more coming.
2019 May Mark Best of Energy Total Returns. Rolling into backwardation, 2019 should mark a best-case scenario of recovering energy prices and positive total returns. Approaching $60-a-barrel WTI at the end of this year vs. $40 in 2018 leaves little price appreciation in 2020, in our view. It's similar in the roll return. The almost 3% positive spread in the Bloomberg Energy Subindex Total Return vs. the spot index on a one-year basis is the greatest in 15 years. Enduring normal backwardation in petroleum prices is unsustainable, if history is a guide. Rapidly increasing production is being hedged in longer-range futures.
Elevated Risk of Return Mean Reversion in 2020
Supply disruptions have supported unleaded gas but are unlikely to repeat. With an annual positive roll yield of about 15%, unleaded gas tops all commodities at month's end. The 10-year average is about minus 1%.
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Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
Metals Gold on Sound Footing, Despite Strong Dollar All (Index weight: 35% of BCOM) Performance: Nov. -4.3%, 2019 +8.1% Industrial (Index weight: 19.0% of BCOM. Performance: Nov. -4.9%, 2019 3.8%, Spot +2.2%) Precious (Index weight: 16.1% of BCOM. Performance: Nov. -3.8%, 2019 +12.7%, Spot +13.8%)
Broad Metal Tailwinds Into 2020
Broad Metals Ripening to Outshine in 2020 and Next Decade. Entering the new decade with the dollar at all-time highs tilts favor toward the metals sector, in our view. It was This gold recovery began with the first Federal Reserve rate the opposite extreme in the dollar about 10 years ago, then hike in December 2015. At about the halfway mark of the subsequent mean reversion that's been a primary metals 2011-15 decline, gold is simply retracing a bear market, for headwind. Gold should remain the stalwart unless equity and now. A new bull market will come when the dollar- dollar strength is sustained. That's unlikely, particularly as we denominated price exceeds $1,900 an ounce. About $1,400 approach a contentious U.S. presidential election. Divergent is a good initial support. strength in the gold price, despite greenback and equity- market record highs, indicate anticipation of a more Gold In-Line for New Highs vs. Equities, Dollar. favorable end-game for the quasi-currency. Recovering gold prices this year are looking ahead to the potential for normalization in the rapidly advancing dollar A definitive U.S.-China trade agreement may pressure gold, and equity-price trends in the coming decade, in our view. but would support industrial metals. The yin-and-yang of On a 10-year rate-of-change basis, the S&P 500 and trade- industrial vs. precious, easy storage and advancing weighted broad dollar are increasing at the fastest pace technology are prime factors tilting our bias towards broad since the beginning of the millennium. The unsustainability metals vs. most commodities. of these trends in the third decade is a primary support
factor for the dollar price of gold.
Precious Metals - Resting Bull Dollar, Stocks Running Too-Hot Risk, Supports Gold Gold Is Ripe to Join the New-Highs Club With Equities, Greenback. It's a new year and decade and gold is poised to follow the dollar and equities to new highs, in our view. When, should be the primary question, particularly when the stock market and greenback succumb to some normal mean reversion. Absent a new higher dollar and stock-price plateau, gold is set to join the all-time-highs club.
Gold Greets Decade With Divergent Strength. Gold prices are on a sound footing for further advancement in the coming year and decade, in our view. Nearing the end of this decade up about 30%, despite about the same in the trade- weighted broad dollar, is an indication of the divergent strength in the metal. Absent sustained and accelerated Unless the greenback and U.S. stocks are embarking on a dollar and stock-market strength, the quasi-currency store-of- new higher plateau, dollar-denominated gold is poised to value is well-poised to shine. Typical market-mean-reversion take the all-time new highs baton. risks favor the metal, with the greenback and U.S. equities ending the decade at all-time highs. Gold's Foundation Is Solidifying. The basis for a sustained structural gold bull market is firming, in our view. Currency debasement is a primary influence on advancing gold prices, yet the dollar-denominated price is appreciating despite all- time highs in the trade-weighted broad dollar. Divergent strength is our take-away as the global benchmark store-of- value looks forward to the potential for some greenback
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Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM) mean-reversion and the unlikeliness of a similar move in the Gold Appears as a Bull Exiting Its Cage. The bigger-picture percentage of steadily increasing U.S. debt-to-GDP. technical backdrop for gold is akin to 2002, when the market embarked on the rally to the 2011 peak. Our graphic depicts Gold Catching Up to Debt/GDP, Ignoring the Dollar the metal in the early days of breaking out from the narrowest 24-month Bollinger bands in almost two decades. The pivotal breakdown level from 2013 -- about $1,550 an ounce -- is initial resistance that should prove to be a speed bump. What was resistance at about $1,400, whichh had held since 2013, is now initial support. Early-Days Gold Breakout, If History Is a Guide
Declining yields despite ballooning U.S. debt shifts the bond vigilante role toward gold. Our graphic depicts the metal appearing low vs. its typically strong relationship with the relative level of debt.
Gold's Favorable Macro End-Game. The end-game for advancing gold amid declining yields and disinflation tilts Five years of consolidation has formed a solid base for prices toward acceleration, in our view. Typically a hedge appreciating prices. Some form of unexpected, unlikely and against inflation and currency debasement, the metals' price powerful force should be necessary to reverse the upside has been increasing, notably since the beginning of the trajectory in gold prices. A peak dollar would be a primary millennium as bond yields and inflation have declined. It's rally catalyst for dollar-denominated gold. unlikely these entrenched trends will shift in the near term and appear at greater risk of accelerating, which supports Less Overbought, Gold Footing Is Firming. Gold's rapidly gold prices. Some substantial forces should be required to diminishing overbought condition opens the door for further flip the trend. A prime candidate is the opposite of the price appreciation, in our view. Near its September peak, aggressive Federal Reserve tightening of the early 1980s that CME-traded gold managed-money positions stretched to squashed inflation and the gold bull at the same time. almost 50% of open interest net long. A similar peak three years ago coincided with the metal's correction to almost What It'll Take to End These Trends Supports Gold $1,100 from just below $1,400 an ounce. Looking down on $1,400 now as support, gold is on a sounder footing, with net longs near the database mean (since 2006) at about 25%. Backing Into Support, Which Was Resistance
Negative yields may be necessary, which should add fuel to appreciating gold. Inflation will eventually come, but the road will be rocky.
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Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
When spot gold closed at this year's peak of $1,553 in Copper Price Trend Is Down, Reversal Unlikely September -- a six-year high -- the metal stretched the most above its 52-week mean (17%) since 2011. This price-to-mean disparity diminished to about 7% on Nov. 19. The 52-week mean is on pace to breach $1,400 by the end of the year.
Base Metals - Hibernating Bear
Dead-Cat Bounce Risks Elevated -- Copper and Industrial Metals. Well-supplied industrial metals are more likely to continue following declining bond yields than rising stock market prices, in our view. It's been a good year and decade for the stock market, yet copper and industrial metals aren't following suit. That's not a good indication for advancing base-metals prices, at least in the near term. It's similar vs. the greenback. The same measure shows
copper almost 0.74 negatively correlated to the trade- Copper, Base Metals Gaining Vulnerability. Copper and weighted broad dollar. About two decades ago, the industrial metals are at greater risk of further declines as we relationship was less than 0.30. Our analysis shows a much enter the new decade, in our view. Typically highly correlated weaker copper-price correlation to most inventory and with emerging-market equities, base metals appear demand vs. supply data. increasingly vulnerable. The inability to advance with EM more recently adds to industrial metal risks if equities Time Decay and Declining Copper Prices. Copper prices decline. Our graphic depicts what we fear is a dead-cat appear to be headed toward the bear-market low of 2016. bounce in the copper price within a broader downtrend, as The red metal's primary companions -- global purchasing represented by the depreciating five-year mean. managers' indexes (PMI) and the greenback -- have returned Base Metals Divergent Weakness vs. Equities to levels consistent with lower prices. Our graphic shows the trade-weighted broad dollar at all-time highs and above the 2016 peak. China's PMI is simultaneously sustaining below the similar low from three years ago. Every passing day absent unlikely reversals in these entrenched trends is a pressure factor on copper prices. Copper Is Too High vs. Greenback, PMI
Trade tensions, diminishing Chinese growth and the transition toward newer, more technology-denominated economies should remain base-metals pressure factors in the near term. In the longer term, metals should shine, notably vs. energy. Over 20 years, measured annually, the Bloomberg Industrial Metals Subindex is about 0.86 correlated to the MSCI EM Index.
Essentially unchanged from a year ago, copper is Equities Wobble, Dollar Soars, Copper Sinks. Increasing consolidating the 2H18 decline and showing divergent stock-market volatility is a principal companion of declining weakness vs. advancing equities. In the past 20 years when copper prices. MSCI Emerging Markets Index 260-day measured annually, copper has a positive 0.92 correlation to volatility appears in early recovery days from the 11-year low China PMI and is 0.70 negatively correlated to the dollar. reached in 2018. Our graphic depicts what matters for the red metal -- EM equities and the dollar. The annual correlation of the EM index vs. copper the past 10 years is about 0.93. At the beginning of the millennium, the relationship was negative.
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Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
Less Oversold, Copper's Downside Risks Rise. Much of the Gold-Copper: Higher Highs, Lows Entrenched oversold condition in copper has been alleviated, tilting risks toward further declines, in our opinion. When copper closed at this year's low of $2.51 a pound in September -- a two-year low -- managed-money positions stretched to the greatest percentage of open interest net short in the database since 2006. Having recovered to about 9% net short on Nov. 19 vs. about 30% two months ago, net positions aren't far from the historic mean at almost 2% long. Copper: The Trend Is Down and It's Less Oversold
This year's ratio peak, led by mean reversion in stock-market volatility from life-of-VIX lows, appears incomplete. Measured annually in the past 20 years, the gold-copper ratio is about 0.65 correlated to the VIX.
Copper Supply May Trail Again in 2020 Contributing Analysts Andrew Cosgrove (Metals & Mining) The global copper market may post a deficit in 2020 of 184,000 tons (kt) after a 221-kt shortfall in 2019 was the Our graphic depicts the copper downtrend at elevated risk second straight. While mine supply may fall about 1% this of resumption, notably with the price much less oversold and year, we project it will return to 1.5% net growth in 2020. near its 52-week mean. Dr. Copper, the metal with the Ph.D. Underpinning our forecast are 665 kt of headline mine- in economics, has spent most of this year consolidating near supply growth and 257 kt of declines from closures and last year's lows. Some unlikely and unexpected force should baseline attrition. be necessary to reverse the metal's ebbing tide. Copper S&D Model
Uptrend in Gold-Copper Ratio Has Legs. Gold prices should sustain the upper hand vs. copper for the foreseeable future, in our view. Our graphic depicts a slight bump in the road in an entrenched uptrend. The upward bias in the gold- copper futures ratio in the past decade has occurred despite the downward trajectory in stock-market volatility. Returning The lion's share of next year's increase comes from recovery to a weak period such as 2017 in the VIX Volatility Index in production from Grasberg (Freeport McMoRan), Katanga should pressure gold vs. copper, but if history is a guide, and Mopani (Glencore), coupled with the continued ramp-up only toward less drastic lows. Higher highs and lows is the at Cobre Panama (First Quantum), new mines coming online gold-copper ratio trend. in the U.S. and brownfield extensions including Spence (BHP), Toquepala (Southern Copper) and Toromocho (Chinalco).
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Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
Nickel Dead-Cat Bounce Risks and Repercussions. A At about $14,600 on Nov. 19, nickel's failed attempt to primary question for the nickel price is what is might take to breach $20,000 resistance appears enduring. Hyped up on arrest its decline, in our view. The macroeconomic electric-vehicle demand and temporary supply disruptions, repercussions of the industrial metal, typically overshadowed nickel risks following similar rally-retracement trajectories as by copper and aluminum, may be significant. We sense this lesser-traded EV-related metals cobalt and lithium. A primary year's spike was a dead-cat bounce. Since peaking in difference is nickel has more significant macroeconomic September at a five-year high, and up over 70% on the year, implications. nickel has declined almost 20% to Nov. 19, dragging other industrial metals along with it. Base Metals - Hibernating Bear Nickel, Industrial Metals Appear in Bear Markets
Gold to Copper, the Metals Sector Set to Shine in Coming Decade. The broad metals sector stands out in the coming decade as a high-probability top performer, in our view. While rapidly advancing technology is unfavorable for both sides of the energy demand vs. supply balance, it's increasing demand for metals. More focus on environmental, social and governance factors (ESG) will limit metals supply and an eventual peak dollar adds tailwinds.
Broad Metals Gaining Tailwinds in Next Decade. Metals have been essentially flat for investors for the past 10 years, but we expect improvement in the coming decade. Down about 10% since the end of 2009 to Nov. 26, the Bloomberg All-Metals Total Return Index is well above the almost 40% The nickel price spike was a primary reason the Bloomberg and 70% declines in agriculture and energy. Energy may Industrial Metals Spot Subindex advanced earlier in the year. appear as the sector with the most mean-reversion room, but Whittled down to less than a 4% gain nearing the end of rapidly advancing technology and demand vs. supply trends November, industrial metals show little indication of favor metals, in our view. Broad metals are uniquely potentially improving global demand-pull economic forces. diversified via precious and industrials. Yin in one is often Our graphic depicts what appear to be greater risks tilted offset by yang in the other. A weakening greenback is a toward the resumption of bear markets. primary bullish companion.
Nickel and Global GDP, Strong Companions. Nickel's price All Metals Index Is Gaining Tailwinds appears at a greater risk of falling further vs. optimism for 2020 global GDP. Our graphic depicts the Organization for Economic Cooperation and Development's outlook for world economic growth improving toward the five-year average in 2020. Unless the GDP gains happen, nickel's price looks high, if history is a guide. Well above its downward-sloping five-year average, nickel risks returning to a bear market since its apex above $50,000 a ton in 2007. Declining Nickel and Diminishing Global GDP
Mean-reversion risks in the trade-weighted broad dollar at all-time highs support metals. A key factor for investors is metals are the easiest to store, thus futures' roll-return nuances are minimized.
Diamond Price Trend Likely to Remain Unfriendly. The poor performance of diamond prices is unlikely to improve, even with the potential advent of ETFs. Artificially boosted prices lay the foundation for an oversupplied market for the
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Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM) foreseeable future, in our view, with advancing technology playing a role. Our graphic depicts flat diamond prices since 2002, notably vs. gains of about 400% in gold and 300% in the S&P 500 total return. There's little reason to expect better diamond-price performance. Diamonds Generally Not Friendly for Investors
Unlike gold, which has had stable and limited new supply for centuries, synthetics are increasingly a part of gemstone production. Standardization is an additional hurdle for diamond ETFs, as is the performance example of oil. The 10- year return of the U.S. Oil Fund (USO) is about minus 70% vs. a 25% decline in crude oil. Metals Performance Tilted Toward Gold. The nickel-to- gold performance spread should continue to narrow, in our view, favoring the precious metal. Up about 40% in 2019 to Nov. 26 vs. the peak near 70%, the nickel hare is likely spent, with negative repercussions for the industrial-metals sector. The white-metals' brief foray within the Bloomberg Commodity Index to a greater weight than aluminum emphasized how extended the price was in September. The only industrial metal with a gain this year appears more of a sector headwind as the EV hype follows cobalt and lithium. Spent Hare Nickel vs. Advancing Gold Tortoise
For gold to lose its status as the top performer next year, some combination of the following should be necessary -- a definitive U.S.-China trade agreement and sustained records in equities and the dollar. We view this as unlikely, particularly as we enter a contentious presidential election.
13
Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
What Do Ag Bulls Need? A Weaker Dollar Agriculture (Index weight: 30% of BCOM) Performance: Nov. -0.4%, 2019 -3.8%, Spot +2.5%) Grains (Index Weight: 24% of BCOM) Performance: Nov. -2.4%, 2019 -5.5%, Spot +0.6%) Softs (Weight: 6% of BCOM) Performance: Nov. +6.4%, 2019 -1.9, Spot +7.5%)
Favorable Price Tilt
Lower Prices Set to Be Cure for Low Ag Prices Next Year, The dollar value of U.S. grain exports tops our correlation Decade. Bottoming agriculture prices are looking ahead to database to broad ag prices at 0.91 since 1991, measured the next year and decade with more favorable underlying annually. For comparison, soybean prices are about 0.84 conditions for advancement, in our view. Top of the list are correlated to the BCOM Ag Index. Led by the grains, the the record-high dollar and trade tensions. The greenback's primary agriculture futures are traded and delivered in the limited further upside vs. mean-reversion potential tilt our U.S. outlook for ag prices toward retracement of the bear market since 2011 -- the year the trade-weighted dollar bottomed. Record Short Agriculture May Follow Gold. The more Trade tensions are unlikely to worsen, but rising weather about as-bad-as-it-gets conditions fade in the rear-view volatility appears a more entrenched trend, with implications mirror, the more agriculture prices are tilted favorably, in our for supply. view. Multi-decade highs in stocks-to-use, trade tensions and the strong dollar are primary ag price pressure factors the Ten-year lows in the Bloomberg Agriculture Spot Subindex past few years, and they're unlikely to worsen. We see earlier in the year and record managed-money net shorts set recovering prices toward the end of this decade looking the stage for an ag price recovery, potentially like gold. Softs ahead to the mean-reversion potential in the next. Our appear sold out and are showing divergent strength vs. graphic depicts a key measure of the extent of the negative accelerating depreciation in the Brazilian real. price sentiment -- managed-money positions reaching
record net-short this year. On the mend from 15% short to
about 5% nearing the end of November, positions are still Waiting For Peak Greenback well off the historic mean of about 7% long in the database since 2006. Peak Greenback Required for Sustained Agriculture Price Recovery. We expect the agriculture sector to look back at Green Shoots in Ags Following Record Shorts the latter half of this past decade as a price foundation. Many stocks-to-use measures appear in early days of backing away from multidecade highs. Low prices are resulting in high U.S. producer financial stress and limiting supply. A peak dollar is primary price support pillar.
Greenback Peak Is Final Pillar for Ag Bottom. Agriculture prices are unlikely to decline further, but they need a weaker to dollar to advance, in our view. The Bloomberg Agriculture Spot Subindex is showing strength approaching 2020. Our graphic depicts ag prices recovering from a 10-year low earlier in the year to a gain over 2% near the end of November, despite the record-high trade-weighted dollar.
Sustained low prices are a primary force shifting demand vs. supply conditions favorably, leaving a final pillar for a price Gold positions achieved a similar extreme last year, setting bottom on the back of a peak greenback. up six-year highs this year. So did Treasury bonds.
14
Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
U.S. Soybean Production Decline Is Historic Harvest 'Meh' -- Soybean Bulls Are in Need of a Real. The Brazilian real needs to stop depreciating for a sustained soybean price recovery, in our view. Divergent strength is our takeaway for the oilseed, despite the real's retreat of about 7% this year. The currency appears on the brink of breaching 4.2 vs. the dollar, which would likely pressure soybeans toward good support of about $9 a bushel. Further declines in the currency will weigh on the recovering oilseed, up about 3% in 2019. Our graphic depicts soybeans being held down by a 60-month average and the depreciating real vs. the dollar. Declining Real Pulling Down Soybean Prices
Wheat Prices, Positions, Curve Improve. Wheat appears in a more-enduring price recovery, with favorable trends in positions and the futures curve. Our graphic depicts the steadily increasing wheat price being led by the one-year curve moving toward backwardation. Indicating demand increasing vs. supply, the curve is about 5% in contango on Nov. 21 vs. 10% a year ago. Hard and soft winter wheat are among the top 10 commodities with futures curves shifting favorably on a one-year basis. Wheat Appears as the Grain-Recovery Stalwart
Brazil is the world's largest exporter of soybeans, sugar and coffee. In the past 10 years, measured annually, the Bloomberg Softs Spot Subindex is 0.73 correlated to the real-to-dollar exchange rate. Soybeans are 0.55 correlated. The graphic depicts the 60-month correlation.
Unfriendly Production Trend Supports Prices. The big drop in U.S. soybean production will continue to reduce inventories and support prices, in our view. The USDA estimates a significant decline in the 2019 crop, and contrary to upward revisions for corn, the trend in the oilseeds' production estimates has been downward since September 2018. Consensus for a 1% decrease from last month's The upward trajectory in managed-money net positions estimate for the 2019 production year would be the least reflects improving wheat-price sentiment. That they remain since June. net-short indicates more price upside due to covering. Wheat appears on pace to visit about $6 a bushel next year, Our graphic depicts the steepest decline in soybean vs. $5.14 on Nov. 21. production below its five-year average in 30 years. With a little help from weather, market forces are rebalancing rapidly. This year's 11-year low price reduced farmers' production incentive, which we expect to transition toward revisiting the 2017-18 highs of about $10.70 a bushel next year. Absent higher prices, more production is unlikely.
15
Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
Makings of a Softs Bottom Softs Bucking the Declining Real Trend in 2019
Prices Will Only Go Lower Is Good Mindset for a Softs Bottom. Soft commodities may have achieved oversold status similar to gold and Treasury bond futures last year. Combined sugar, cotton and coffee managed-money positions are recovering from record net shorts and showing divergent strength to the weakening Brazilian real. Low prices may finally be curing oversupply. Softs Extreme Doom and Gloom May Mark Bottom. We expect conditions and sentiment in the softs are unlikely to get much worse and may be marking a long-term price bottom. Led by sugar, managed-money positions on the constituents in the Bloomberg Softs Spot Subindex appear in early recovery days from the most net-short in the database since 2006. Our graphic depicts sugar, cotton and coffee Indicating the increasing influence of Brazil and its currency, positions as a percentage of open interest recovering from in the history of the softs index from 1991 to 2008, the about 20% net short. Still, over 10% short on Nov. 26 correlation to the real was near zero. Brazil is the world's compares with the historic average around 7% long. largest exporter of soybeans, sugar and coffee.
Extreme Shorts May Indicate Bottom in Softs Sugar Downside Limited Until Shorts Squeezed. Short- covering risks don't get much more elevated in sugar. Managed-money net futures positions appear to be in the early recovery days from the greatest short in the database since 2006. Since CME-traded sugar futures (the world's benchmark) dipped below 11 cents a pound in September for the first time in about a year, net positions have sustained just over 20% of open interest. Prices have recovered, but should continue appreciating, at least until the bulk of positions are covered. Diminishing Returns - Declining Prices vs. Shorts
When a market leans that hard bearish, it typically needs sustained negative price fuel to stay down. Plenty more supply and a weakening Brazil real, in addition to U.S-China trade tensions, should be needed for softs to extend their decline. Record shorts are a sign that low prices are approaching the cure for low prices.
Softs Show Divergent Strength to Real. Soft commodities are showing divergent price strength vs. the declining Brazilian real but are subject to further currency weakness. The Bloomberg Softs Spot Subindex is up almost 7% in 2019 Our graphic depicts what appears to be a minor price blip, to Nov. 26 despite a 9% decline in the Brazilian real vs. the up about 8% in the front March future since the lows. dollar. It's a moribund sector that's showing signs of being Fundamentally oversupplied and suffering with a weak oversold is our take away. Sustaining such divergences are Brazilian real, it's unlikely prices will depreciate further until rare, if history is a guide. In the past 10 years, measured shorts are fully covered. Such extremes can often mark annually, the Bloomberg Softs Spot Subindex is 0.73 longer-term price bottoms. correlated to the real-to-dollar exchange rate. Sugar Tops the Commodity-Shorts Leader Board. Sugar is
the commodity most at risk of a short-covering rally. Our BI COMD graphic of managed-money net positions -- sorted short to long -- has sugar on top. A week ago, the measure
16
Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM) was almost double the positions as corn. On a one-year- Indicating the significance of the curve on total returns, change basis, about 150,000 new shorts entered sugar livestock prices are up about 4% this year, yet the Bloomberg through Nov. 22, topped only by almost 370,000 in natural Livestock Subindex Total Return is closer to a 8% decline. gas. Indicating new shorts, sugar open interest has increased about 20% year-over-year vs. almost a 12% decline in natural gas. Sugar Leaning Hard to the Short Side of the Boat
Sugar's fundamentals are bearish, as indicated by positions this extreme. Yet risks of further downside are limited, as we see it, with futures set up for a worst-case scenario.
PERFORMANCE DRIVERS Ag Performance Shows Markets on the Mend. Grain-price stabilization led by soybean-oil and wheat should gain recovery legs, in our view. Less environmentally friendly palm oil prices are ahead of soybean oil, and adverse weather is at the heart of wheat and potential grain-price recoveries. Our graphic depicts the Bloomberg Grains Spot Subindex on the cusp of a gain in 2019. Grains have been unable to post an annual total return gain since 2012, notably due to rolling into steep contango-shaped futures curves. Indicating demand increasing vs. supply, that's changing. The average of the grains one-year curves dropped to about 6% contango on Nov. 25 vs. 9% a year ago. Narrowing Contango - Improving Grain Returns
17
Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
DATA on BI COMD Performance - Overview Key Metrics
Historical Performance may vary from above due to delayed end date
18
Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
Performance – Commodity Total Returns Key Metrics
Historical
19
Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
Performance – Prices Key Metrics
Historical
20
Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
Performance - Volatility Key Metrics
21
Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
Curve Analysis – Contango (-) | Backwardation (+) Key Metrics
Measured via the one-year futures spread as a percent of the first contract price. Negative means the one-year out future is higher (contango). Positive means the one-year out future is lower (backwardation.
Historical
22
Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
Curve Analysis – Gross Roll Yield Key Metrics
Historical
23
Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
Curve Analysis – Forwards / Forecasts Spread %
Data Set
24
Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
Market Flows – Open Interest Key Metrics
Historical
25
Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
Market Flows – Commitment of Traders Key Metrics
Historical
26
Bloomberg Commodity Outlook – December 2019 Edition Bloomberg Commodity Index (BCOM)
Market Flows – ETF Flows (annual)
27
PERFORMANCE: Bloomberg Commodity Indices
Composite Indices * Click hyperlinks to open in Bloomberg
2019 Index Name Ticker Nov YTD 1-Year 3-Year 5-Year 10-Year 20-Year 30-Year 40-Year 50-Year Bloomberg Commodity ER BCOM -2.68% 0.52% -6.60% -10.34% -31.73% -43.51% -14.41% -14.73% -36.87% 379.77% Bloomberg Commodity TR BCOMTR -2.56% 2.52% -4.54% -5.79% -28.01% -40.21% 20.11% 96.92% 262.68% 5139.80% Bloomberg Commodity Spot BCOMSP -2.00% 5.22% -2.96% 3.53% -6.03% -4.04% 211.60% 255.53% 241.96% 1807.86% Bloomberg Roll Select BCOMRST -2.40% 0.98% -4.63% -5.97% -24.55% -31.01% 153.58% 1 Month Forward BCOMF1T -2.15% 2.87% -3.32% -3.92% -24.68% -32.75% 107.77% 2 Month Forward BCOMF2T -2.26% 2.35% -0.76% -0.59% -21.37% -31.25% 150.83% 3 Month Forward BCOMF3T -1.80% 2.95% 0.26% -1.20% -20.61% -28.83% 161.72% 4 Month Forward BCOMF4T -1.76% 2.66% 0.35% -0.74% -17.23% -23.43% 5 Month Forward BCOMF5T -1.76% 3.47% 1.17% 0.86% -15.68% -22.51% 6 Month Forward BCOMF6T -1.77% 2.84% 0.79% 0.96% -14.85% -21.43% Energy BCOMENTR -2.57% 4.57% -15.03% -4.75% -51.61% -72.41% -51.92% 11.15% Petroleum BCOMPETR 2.06% 22.08% 10.76% 16.91% -37.16% -50.72% 64.86% Agriculture BCOMAGTR -0.45% -3.82% -6.12% -25.39% -35.49% -36.20% -26.46% -19.61% 7.20% 1382.02% Grains BCOMGRTR -2.39% -5.49% -6.67% -21.31% -39.22% -42.17% -35.79% -46.26% -35.33% 400.02% Industrial Metals BCOMINTR -4.90% 3.81% -1.51% 2.67% -9.31% -27.28% 102.21% Precious Metals BCOMPRTR -3.80% 12.65% 19.14% 16.69% 16.38% 9.10% 308.12% 236.02% 141.92% Softs BCOMSOTR 6.35% -1.85% -8.01% -37.39% -38.83% -43.10% -52.30% -31.19% 7.16% 2587.12% Livestock BCOMLITR -2.08% -7.43% -8.25% 6.46% -29.45% -18.16% -51.75% -26.67% Ex-Energy BCOMXETR -2.58% 1.68% 0.55% -6.78% -17.31% -20.57% 41.47% Ex-Petroleum BCOMXPET -3.91% -2.47% -8.61% -12.27% -28.15% -40.48% Ex-Natural Gas BCOMXNGT -1.44% 6.23% 3.08% -0.90% -19.96% -25.47% Ex-Agriculture BCOMXAGT -3.40% 5.28% -4.05% 3.56% -25.76% -44.02% Ex-Grains BCOMXGRT -2.59% 4.19% -4.29% -2.27% -25.89% -41.65% Ex-Industrial Metals BCOMXIMT -2.06% 2.16% -5.21% -8.03% -31.86% -43.57% Ex-Precious Metals BCOMXPMT -2.29% 0.56% -8.54% -9.68% -34.86% -47.27% Ex-Softs BCOMXSOT -3.19% 2.81% -4.32% -3.09% -27.64% -40.84% Ex-Livestock BCOMXLIT -2.59% 3.17% -4.37% -6.49% -28.06% -41.54% Ex-Agriculture & Livestock BCOMXALT -3.52% 6.50% -3.82% 3.23% -25.77% -46.31% Bloomberg Dollar Spot BBDXY 1.11% 1.10% 0.05% -3.70% 9.23% 25.88% Bloomberg US Large Cap TR B500T 3.70% 28.00% 16.50% 52.33% 68.38% US Aggregate LBUSTRUU -0.05% 8.79% 10.79% 12.82% 16.39% 42.29% 165.76% 462.06% 1713.59% US Treasury LUATTRUU -0.30% 7.46% 9.77% 10.77% 13.14% 33.30% 147.02% 410.26% 1518.01% US Corporate LUACTRUU 0.25% 14.17% 15.85% 19.25% 24.91% 69.65% 221.62% 612.51% 2285.15% US High Yield LF98TRUU 0.33% 12.08% 9.68% 20.16% 30.10% 110.08% 293.97% 979.93%
Single Commodity Indices
2019 Ticker Index Name Nov YTD 1-Year 3-Year 5-Year 10-Year 20-Year 30-Year 40-Year 50-Year Natural Gas BCOMNGTR -16.41% -35.31% -56.64% -54.27% -80.62% -95.17% -99.35% Low Sulfer Gas Oil BCOMGOT 1.91% 15.61% 8.60% 35.18% -26.12% -25.97% 218.43% WTI Crude BCOMCLTR 1.82% 21.07% 8.02% 7.92% -51.35% -67.24% -2.71% 167.20% Brent Crude BCOMCOT 3.06% 22.77% 11.09% 29.17% -33.34% -37.04% 242.65% ULS Diesel BCOMHOTR 0.67% 15.43% 6.53% 21.63% -26.72% -32.81% 141.91% 286.36% Unleaded Gasoline BCOMRBTR 1.35% 36.15% 26.17% 11.37% -24.71% -12.80% 243.20% 793.83% Corn BCOMCNTR -4.36% -6.93% -7.41% -21.10% -41.87% -46.27% -76.34% -84.32% -81.21% -35.72% Soybeans BCOMSYTR -5.83% -7.43% -8.52% -27.71% -26.29% 5.50% 210.82% 217.34% 245.24% 3350.05% Wheat BCOMWHTR 5.67% 5.88% 3.53% -2.80% -42.23% -69.82% -83.33% -90.45% -87.90% -22.07% Soybean Oil BCOMBOTR -1.14% 6.22% 4.72% -25.74% -21.86% -50.43% -15.42% -19.90% -20.95% 2305.10% Soybean Meal BCOMSMT -4.38% -9.03% -10.15% -18.67% -21.13% 79.06% 909.47% HRW Wheat BCOMKWT 4.65% -16.95% -18.70% -30.11% -66.26% -73.83% -74.29% Copper BCOMHGTR 0.63% 1.93% -3.59% -1.29% -10.79% -25.90% 256.71% 667.16% Alumnium BCOMALTR 0.78% -5.44% -11.36% 0.80% -20.23% -42.83% -29.24% Zinc BCOMZSTR -8.25% -1.09% -3.94% -4.01% 12.17% -13.23% 46.65% Nickel BCOMNITR -18.02% 29.24% 23.21% 20.72% -19.16% -24.74% 192.52% Gold BCOMGCTR -3.12% 13.96% 19.35% 22.62% 20.85% 16.73% 347.02% 239.83% 216.72% Silver BCOMSITR -6.01% 8.54% 18.88% 0.08% 2.90% -17.64% 174.47% 146.27% -34.30% Sugar BCOMSBTR 3.82% -1.86% -7.86% -46.66% -40.97% -60.35% 3.38% 3.21% -70.75% 119.17% Coffee BCOMKCTR 13.37% 2.83% -2.42% -42.20% -61.89% -65.95% -92.46% -80.64% -77.59% Cotton BCOMCTTR -1.18% -11.58% -18.94% -8.92% 5.32% 23.72% -64.87% -44.92% 150.52% 1042.93% Live Cattle BCOMLCTR 2.75% 1.26% 4.31% 17.57% -13.07% 14.63% 4.08% 92.80% 692.31% 3681.27% Lean Hogs BCOMLHTR -10.95% -22.96% -30.32% -15.52% -53.45% -56.80% -87.03% -88.24%
28 PERFORMANCE: Bloomberg Commodity Roll Select Indices
Composite Roll Select Indices * Click hyperlinks to open in Bloomberg
2019 Index Name Ticker Nov YTD 1-Year 3-Year 5-Year 10-Year 20-Year 30-Year 40-Year 50-Year BCOM Roll Select BCOMRST -2.40% 0.98% -4.63% -5.97% -24.55% -31.01% 153.58% Roll Select Agriculture BCOMRAGT -0.69% -4.75% -6.72% -22.88% -33.27% -28.20% 33.27% Roll Select Ex-Ags & Livestock BBURXALT -3.09% 4.78% -3.65% 2.90% -20.13% -36.50% Roll Select Grains BCOMRGRT -2.52% -6.43% -7.18% -18.40% -35.87% -35.16% 22.25% Roll Select Softs BCOMRSOT 5.48% -4.04% -9.95% -38.76% -41.49% -35.42% -16.47% Roll Select Livestock BCOMRLIT -3.07% -10.54% -9.37% -10.17% -41.22% -15.68% 33.56% Roll Select Energy BCOMRENT -1.68% 1.61% -14.29% -4.47% -42.04% -60.76% 95.47% Roll Select Ex-Energy BCOMRXET -2.71% 0.80% 0.02% -7.06% -17.32% -15.09% 133.89% Roll Select Petroleum BCOMRPET 2.30% 17.69% 8.59% 15.94% -25.91% -34.45% 376.89% Roll Select Industrial Metals BCOMRINT -4.82% 2.99% -2.32% 1.57% -9.57% -24.23% 193.00% Roll Select Precious Metals BCOMRPRT -3.71% 12.74% 19.20% 16.79% 16.98% 10.20% 323.65%
Single Commodity Roll Select Indices
2019 Ticker Index Name Nov YTD 1-Year 3-Year 5-Year 10-Year 20-Year 30-Year 40-Year 50-Year Natural Gas RS BCOMRNGT -14.30% -35.37% -54.00% -49.55% -74.10% -90.34% -89.95% Low Sulfer Gas Oil RS BCOMRGOT 1.98% 12.17% 5.37% 27.62% -26.81% -27.02% 251.26% WTI Crude RS BCOMRCLT 2.27% 18.83% 9.80% 11.37% -31.38% -43.79% 346.31% Brent Crude RS BCOMRCOT 3.06% 17.58% 7.96% 25.47% -25.78% -29.70% 445.74% ULS Diesel RS BCOMRHOT 1.56% 12.76% 3.95% 11.93% -28.24% -36.38% 299.69% Unleaded Gasoline RS BCOMRRBT 1.18% 25.59% 16.95% 14.83% -10.60% 1.80% 479.31% Corn RS BCOMRCNT -4.98% -8.93% -8.92% -19.09% -38.76% -41.96% -56.78% Soybeans RS BCOMRSYT -5.00% -5.06% -6.12% -17.42% -14.33% 31.55% 378.07% Wheat RS BCOMRWHT 5.38% 1.58% 0.10% -11.07% -47.87% -68.36% -47.79% Soybean Oil RS BCOMRBOT -1.16% 5.99% 4.51% -25.64% -21.12% -45.40% 23.15% Soybean Meal RS BCOMRSMT -4.20% -7.96% -8.78% -7.61% -13.84% 105.78% 1337.42% HRW Wheat RS BCOMRKWT 3.17% -20.84% -22.05% -31.72% -65.03% -71.69% -41.39% Copper RS BCOMRHGT 0.67% 1.81% -3.90% -0.69% -10.75% -23.36% 397.19% Alumnium RS BCOMRALT 0.78% -6.82% -12.49% -2.69% -20.88% -39.86% 1.41% Zinc RS BCOMRZST -8.25% -2.92% -5.72% -6.62% 9.68% -10.74% 122.50% Nickel RS BCOMRNIT -17.74% 28.80% 22.82% 20.75% -18.29% -20.75% 367.07% Gold RS BCOMRGCT -3.02% 14.05% 19.44% 22.74% 21.55% 17.52% 351.95% Silver RS BCOMRSIT -5.93% 8.63% 18.84% 0.17% 3.37% -15.84% 206.92% Sugar RS BCOMRSBT 2.65% -5.28% -11.04% -50.39% -47.72% -56.74% 109.89% Coffee RS BCOMRKCT 12.46% 0.83% -3.74% -42.76% -61.46% -62.27% -87.62% Cotton RS BCOMRCTT -1.62% -11.48% -19.36% -5.36% 9.56% 50.82% -42.75% Live Cattle RS BCOMRLCT 1.35% -5.13% -2.07% 5.38% -23.08% 12.46% 62.85% Lean Hogs RS BCOMRLHT -9.93% -18.56% -20.12% -33.68% -63.23% -50.79% -21.21%
29 BCOM Constituent Weights BCOM Index MEMB
30 BLOOMBERG INTELLIGENCE: COMMODITY DASHBOARDS BI
Crude Oil Production: BI OILS
Precious Metal Mining: BI PMET
Copper: BI COPP
31 COMMODITY CHEAT SHEET FOR THE BLOOMBERG PROFESSIONAL® SERVICE The data provided in this report can be easily accessed on the Bloomberg Professional® service along with numerous news and analytical tools to help you stay on top of the commodity markets. * Click hyperlinks to open in Bloomberg
Broad Commodities Energy Top commodity news CTOP Top energy news ETOP Global commodity prices GLCO Top oil news OTOP Commodity playbook CPLY Crude Oil Production Dashboard BI OILS Commitments of traders report COT First Word oil NI BFWOIL Calendar of commodity events ECO17 News on oil inventories TNI OIL INV Commodity arbitrage calculator CARC Oil Buyer's Guide newsletter NI OBGBRIEF Commodity fundamental data explorer FDM Pipes & Wires newsletter NI PAWSBRIEF Commodity futures overview CMBQ Oil market analysis BOIL Security finder SECF Nat gas spot prices BGAS Commodity data contributors & broker CDAT Forward European utility markets EUM Contract table menu CTM News on oil markets NI OILMARKET Seasonality chart SEAG News on OPEC NI OPEC Commodity curve analysis CCRV OPEC production and prices OPEC Commodity fair values CFVL Oil markets menu OIL Commodity price forecasts CPFC Crude stored in tankers NOON Commitments of Traders Report COT Refinery outages REFO Commodity maps BMAP Oil’s decline EXT5 Commodity options monitor OMON Oil versus inflation expectations SWIF Commodities charts COSY Commodity Investors menu CMNV Metals US exchange traded product fund flows ETF Top metal news METT Precious metal dashboard BI PMETG Base metals dashboard BI BMET Commodity Indices Metals prices and data MINE Index description BCOM Index DES Precious metals prices and rates MTL Index constituent weights BCOM Index MEMB Metals Bulletin MB Listed index futures BCOM Index CT COMEX inventories COMX Option volatility surface BCOM Index OVDV LME monitor LME Seasonality chart BCOMNG Index SEAG LME implied volatilities LMIV Commodity index futures movers FMV LME warehouse inventories LMEI Commodity index ranked returns CRR Agriculture Weather Top agriculture news YTOP Global weather database WETR Agriculture calendar AGRI US snow monitor SNOW Agriculture spot prices AGGP EU weather & utility models EUMM Agriculture supply & demand AGSD Crop calendar CCAL
BCOM QUICK FACTS Index Methodology
Weighting Bias 2/3 market liquidity and 1/3 world production No. of Commodities 20 Re-balancing Frequency Annual Roll Schedule Monthly (5 day roll) Caps/Limits Single commodity: max 15% Single commodity and its derivatives: max 25% Related commodity groups: max 33% First Value Date 30 December 1990 32 The data included in these materials are for illustrative purposes only. The BLOOMBERG TERMINAL service and Bloomberg data products (the “Services”) are owned and distributed by Bloomberg Finance L.P. (“BFLP”) except (i) in Argentina, Australia and certain jurisdictions in the Pacific islands, Bermuda, China, India, Japan, Korea and New Zealand, where Bloomberg L.P. and its subsidiaries (“BLP”) distribute these products, and (ii) in Singapore and the jurisdictions serviced by Bloomberg’s Singapore office, where a subsidiary of BFLP distributes these products. BLP provides BFLP and its subsidiaries with global marketing and operational support and service. Certain features, functions, products and services are available only to sophisticated investors and only where permitted. BFLP, BLP and their affiliates do not guarantee the accuracy of prices or other information in the Services. Nothing in the Services shall constitute or be construed as an offering of financial instruments by BFLP, BLP or their affiliates, or as investment advice or recommendations by BFLP, BLP or their affiliates of an investment strategy or whether or not to “buy”, “sell” or “hold” an investment. Information available via the Services should not be considered as information sufficient upon which to base an investment decision. The following are trademarks and service marks of BFLP, a Delaware limited partnership, or its subsidiaries: BLOOMBERG, BLOOMBERG ANYWHERE, BLOOMBERG MARKETS, BLOOMBERG NEWS, BLOOMBERG PROFESSIONAL, BLOOMBERG TERMINAL and BLOOMBERG.COM. Absence of any trademark or service mark from this list does not waive Bloomberg’s intellectual property rights in that name, mark or logo. All rights reserved. © 2019 Bloomberg.
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