Released November, 2017
Commodities Greet December With Improving Foundation for 2018
(Bloomberg Intelligence) -- November's pause sets up a more favorable foundation for commodities in 2018. Levels that supported the Bloomberg Commodity Index in 2012-14 should be in play as target resistance in 2018 -- about 12% above end-of-November levels. A potential peak dollar would be a key driver, but absent a weak buck, favorable broad-commodity demand vs. supply should keep the market supported. Metals, retracing some gains recently, are on firmer ground for continued leadership.
Near the upper end of three-year ranges, energy's risks are similar to the 1H flush, though backwardation indicates the extent that the market has improved. Agriculture remains the lowly wildcard, also offering the greatest mean-reversion potential to catch up with the performance of other sectors.