May 2017

Energy stabilizing, the U.S. dollar peaking and improving global PMIs indicate the commodity market is ripe for recovery, highly subject to summer weather in Illinois. Led by energy, the BCOM total return declined 1.3% in May totaling 5.1% in 2017 – on a spot basis, minus 2.2%.The key broad commodity driver this summer should be grains – they could continue drifting lower or risk a powerful rally. Record U.S. exports of grains, meat and natural gas on the back of near-record net grain shorts should heat up broad commodity returns if the summer sizzles a bit more than expected. Summer weather could set the 2017 tone in broad commodities as highly sought after U.S. agriculture and livestock exports may be indicative of the broad sector, transitioning more to demand driven. The declining dollar is primary support for metals. When energy stops declining, a recovery should be set.