Commodity Market 2018 Outlook

January 24, 2018 10:34AM CST

As 2018 kicks off, it is good to take a step back and see where things are and where they may be headed.

Beginning with interest rates, 2017 ended with a rate hike with several more forecast for 2018.  Take this into account along with a decidedly risk off environment, we’ve seen bonds/notes/interest rate products offered along with the dollar, while commodity indices are strong along with commodity currencies such as the Australian and Canadian dollar.  This is aided even further as Treasury Secretary Mnuchin made comments that a weaker dollar may be good for the United States.  Gold and oil have also been bid to begin the year and many look to see if agricultural markets will follow suit amid a weak dollar and increasing appreciation in commodities.

For many, commodities seem poised for a strong year as a continuation of equity and economic strength will support the current bid and have portfolios looking to diversify.  Should the converse occur, with equity and economic strength faltering, commodities will again benefit as capital seeks places for uncorrelated diversification.

Also, as talks of international trade in a global market heat up, commodities priced in cheaper dollars will be more attractive for export and international trade.

Lately, a number of traders and news outlets have noted the increase in commodity indices as of late, with the CRB Commodity Index up 11% over 6 months as of yesterday.

U.S. Dollar Index Daily Chart

dollar_daily_Chart

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.