Month-end dynamics accelerate fear-based momentum ahead of May 1 FOMC
May 1, 2024
Key Observations:
All 27 commodity futures markets listed in the chart at right exhibited a risk-off mood to close out April. From the highest closing prices in April, the median price decline was –4.0% in a range of –16.0% (NYB cotton) to –0.2% (CME live cattle).
Large moves off the in-month highs also occurred in ICE UK natural gas (–13.7%), LME tin (–13.0%), CMX silver (–8.5%), and the ICE and NYM diesels (–11.1% and –9.4%, respectively). But take note that the movements in natural gas and diesel are largely seasonal effects through heating markets.
Seventeen of the twenty-seven markets (63%) have posted a spot price advance year to date. The range of price movements has been –20.8% (NYM natural gas) to +38.5% (CME lean hogs), with the median price change across all 27 markets at +9.1% and the mean change at +6.0%.
Institutional investor interest in commodities remains substantial, according to traders' commitments data supplied by the exchanges through MiFID and the CFTC. By our calculations, between mid Feb and late April 2024, the group's net length increased by >150% in value at risk.
Moreover, price returns in the largest and most liquid markets were robust ytd through April despite the souring sentiment: NYM RBOB gasoline, +28.9%; LME copper, +16.7%; LME nickel, +16.2%; ICE Brent, +14.0%; CMX gold, +11.2%; LME aluminum, +9.1%.
Source: NYM, ICE, LME, CMX, CBOT, CME, Bloomberg, Blacklight Research. Note: price changes calculated on daily closes. ICE EU Carbon Allowance and ICE TTF natural gas are priced in euros. ICE UK natural gas is priced in British pounds. All other markets shown in the chart are traded in U.S. dollars.
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