Bleet

September 3, 2024

Below are the latest Commodity Condition Index (CCI) scores for 36 markets, rank ordered from strongest to weakest (30 to 0 scale). Of this sample, 22% are above the neutral reading (15) and 78% are below. This is worse than a week ago (31%/69%) but better than a month ago on the eve of the Aug 5 rout in global markets (8%/92%). A year ago, the splits for this sample were 36%/64%.

Among all current scores, accumulating markets slightly outnumber deteriorating markets (19 v 17). Among the 9 above-average CCIs, deteriorating markets outnumber accumulating by 2:1. Among the 27 below-average CCIs, accumulating markets outnumber deteriorating markets 16 to 11. In sum, the data are still bullish for gold futures and incrementally more friendly to long positions in zinc, aluminum, and copper. Still reads too early in iron and steel, despite the incrementally improving numbers for HRC (#28) from its very weak base. The industrials seem to be looking for direction on policy (e.g., Beijing and FOMC) but there are burgeoning signs of life in manufacturing. For now, on the long side probably safest to stick to where we can also document tightening supply: notice zinc at #3 and copper at #9.

We also like the momentum in European gas and expect Henry Hub will surprise to the upside before yearend on seaborne arbitrage. Notice that on Aug 31--the Saturday of Labor Day weekend (!)--the DOE quietly issued the first new LNG export license (non-FTA) since January (New Fortress Energy, 2.8 mmtpy, 5-year term, through Mexico). That looks like the incumbent U.S. Administration might be getting worried that promoting too sloppy a surplus in the Permian might backfire into forcing large production cuts and suddenly significantly higher prices in the domestic market.

We still like soyoil (#14) and corn (#35) as patient value plays. The slump in the diesels to the bottom rung of our model (and still deteriorating) is a symptom of the sluggishness in economic activity, especially in industry (foots with <50 PMI). That’s demand-led and is a red flag. But the real incremental headwind for oil products now is the roll of the calendar toward winter-grade gasoline. That’s the first-order reason why XB1 is off 6% as I type. It’s the imminent seasonal availability of butane to expand the US gasoline supply pool as summertime RVP restrictions ease.

Market / CCI Score / Accumulating or Deteriorating

1 Gold 20.4 A

2 Coffee 20.1 D

3 Zinc 19.8 A

4 Cocoa 18.8 D

5 Silver 18.4 D

6 Tin 17.3 D

7 Aluminium 16.6 D

8 Gas, TTF 15.4 A

9 Copper 14.8 D

10 Gas, UK 14.3 A

11 Platinum 14.1 D

12 Live cattle 13.9 A

13 CO2 allow 13.8 A

14 Soybean oil 13.0 A

15 Lead 12.2 D

16 Nickel 12.2 D

17 Lean hogs 12.1 A

18 Palladium 11.9 A

19 Cotton 10.9 D

20 Steel, rebar 10.2 D

21 Sugar, raw 9.9 A

22 Soybeans 9.1 A

23 Crude, Eur. 9.0 D

24 Crude, NAM 8.7 A

25 Gas, HH 8.6 D

26 Iron ore 7.7 D

27 Soymeal 7.6 A

28 Steel, HRC 7.6 A

29 Wheat, HRW 6.9 A

30 RBOB 6.9 D

31 Wheat, SRW 6.3 A

32 Crude, Asia 5.8 A

33 Wheat, HRS 5.3 A

34 Gasoil 5.1 D

35 Corn 5.0 A

36 ULSD 4.8 D