MacroVar monitors commodities markets using models for commodities prices analysis and multiple factors affecting them like global economic conditions, currencies, and seasonality. Learn how to analyze commodity markets using MacroVar commodities models.
Systematic Risk model
Risk Management model
Commodities are goods used in the production of other goods and services. Commodities are grouped into Energy Commodities, Metals, Precious Metals, Softs and Grains. Each commodity group is affected by different sets of factors.
MacroVar Quantitative Signals
MacroVar models monitor different quantitative values for all commodities markets. The most important commodities prices indicators are: 1. MacroVar Trend Indicator, 2. MacroVar Momentum Indicator, 3. Year on Year momentum, 4. 3m, 5. 1m, 6. 1w
MacroVar commodities trend indicator is compiled from signals compiles from different timeframes. Commodities trend indicator ranges from -100 to +100. A commodities prices technical rollover is identified when MacroVar trend strength indicator moves from positive to negative. MacroVar commodities momentum indicator monitors price action for different timeframes of commodities. Momentum indicator ranges from -100 to +100.
Learn more on MacroVar trend strength indicator and MacroVar momentum strength indicator.
Commodities prices are affected by multiple factors. Click a specific commodity from the table above to explore the commodity’s factors, signals, and price dynamics. MacroVar monitors the following types of factors affecting commodities:
Commodities are exchanged using US dollars. When the US dollar rises value it causes a drop across all commodities prices. The US dollar is affected by many factors like the US monetary policy and fiscal policy. Learn more about the factors affecting the US Dollar.
Commodities and the Global Economy momentum
Energy commodities and metal commodities used in manufacturing are cyclical and closely correlated with global economic growth. The most important commodities considered leading indicators of the global economy are crude oil and copper.
Crude oil demand depends on global trade hence it is intricately linked to global economic growth. Copper is the main metal used in most sectors of the economy from construction to electronics and power generation and transmission. Shipping is a commodity related sector which is also affected by global economic growth.
MacroVar monitors both commodities prices dynamics closely versus the Global Manufacturing PMI which is a leading indicator of global economic growth. Large divergences between commodities and Global PMI momentum measured by year over year return may signify commodity trading opportunities.
Commodities and Global Risk
Precious metals are considered low-risk safe assets during increased global market risk. Funds flow to precious metals in anticipation of fiscal and monetary policy stimuli programs which normally bring inflationary conditions and currency depreciations or devaluations. Gold is the most important safe asset followed by silver platinum and palladium. Silver, platinum and palladium are considered precious metals but since they are also used as basic metals in manufacturing, they are also affected by the global economy.
Some commodities are heavily affected by seasonality. MacroVar monitors seasonality for the following commodities: Crude Oil, Natural Gas, Gold, Lumber, Sugar, Corn, Baltic Dry Index, Copper, Silver, Palladium, Cotton. Check our guide on how MacroVar monitors seasonality for financial markets.
Demand / Supply Dynamics
Commodity prices are determined by demand and supply dynamics. Commodities supply shocks like the Vale dam disaster or extreme weather conditions like floods often lead to supply disruptions and sudden spikes in commodity prices. Some commodities are affected by political crisis in commodity producing countries.
The main sources for monitoring the physical demand and supply of the crude oil market are OPEC, and IEA reports and actions.
Platinum & Palladium
John Matthey produces detailed reports for the demand / supply dynamics of the physical market for platinum and palladium.
Agriculture commodities are affected by weather conditions. Extreme weather phenomena like spring floods have historically caused commodities prices spikes due to supply shocks mainly for food commodities like corn, wheat, rice, soybeans, and coffee.
Weather forecasts are particularly useful in monitoring when trading food commodities. US weather forecasts are provided by NOAA.
Aura commodities provides live monitoring of global weather conditions and detailed reports for demand and supply dynamics for the following food commodities: corn, soybeans, wheat, cocoa, coffee, cotton, sugar, and palm oil.
Commodities and Commitment of Traders Report
The COT report is used by MacroVar to analyze the sentiment of financial institutions and hedge funds about commodities monitored. Check our guide on how to analyze the cot report.
Commodities Markets vs ETF
ETFs comprised of commodities producing companies are closely correlated with the spot price of these commodities. MacroVar monitors the correlations of those pairs looking for divergence investment opportunities.
Commodities Markets vs commodity producing countries
The economies and currencies of commodity producing countries for a specific commodity are leading indicators of specific commodities. MacroVar monitors correlations between commodity prices and currencies of these countries. For example, MacroVar monitors the correlation between crude oil and the Russian Rubble since Russian economy is heavily exposed in the production of crude oil.
Commodities Markets analyzed
MacroVar analyzes the following commodities grouped by type:
- Energy Commodities: Crude Oil, Natural Gas, Heating Oil, Uranium
- Metals: Copper, Iron Ore, Aluminum, Nickel
- Precious Metals: Gold, Silver, Platinum, Palladium
- Soft Commodities: Rubber, Lumber, Cotton, Platinum, Coffee, Cocoa, Sugar, Orange Juice
- Food Commodities: Corn, Wheat, Oat, Rice, Soybeans, Soybean Oil, Soybean meal, Feeder Cattle
- Shipping: Baltic Dry Index, Baltic Capesize Index, Baltic Panamax Index, Baltic Supramax Index, Baltic Handysize Index, Baltic Dirty Tanker Index, Baltic Clean Tanker Index, China Bulk Freight Index, China Container freight index