Three Months Of Commodity Adjustment: "Turning Potential" Or "Diving"

Over the past three months, at home and abroad commodity market Experienced a storm of baptism, such as basic metals, precious metals, energy, soft goods and other leading varieties in the short term are "avalanche". London's copper price has dropped by more than 12% from its peak in February. cotton More than 30% diving, silver, crude oil and other commodities for more than two weeks has plunged more than 30% and 20%.

At this time, we can see a common phenomenon - some people began to "make fun of Rodgers". His famous long term bull market theory, which once fascinated many people, was described as a "flicker". Investment products seemed to be a joke. We can also see a phenomenon that the sound of bad dollar has suddenly disappeared. dollar With a strong appreciation, all commodities will be under pressure. As seen by everyone in the past three months, the bull market has ended.

In fact, before the tide of commodity decline since February, the whole market has been developing for more than two years. Under the "aid" of banknote printing and bailout, abundant liquidity and demand for economic recovery have made copper in nonferrous metals one of the longest growing varieties. International copper prices began to reverse nearly "V" from the end of 2008, and in February this year it increased by more than 260%. In the second half of 2010, the "value depressions" agricultural products began to shift their focus. After that, the prices of corn, wheat and sugar doubled, and cotton doubled two times. Silver has risen by more than 150% in the past six months, such as copper, gum, cotton and other commodities, even exceeding the level before the financial crisis in 2008.

But this round of adjustment is like careless "rubbing into the sand of the eyes". Investors accustomed to long-term bull market suddenly become unaccustomed to short-term adjustment. However, the rise of commodities is always long, and the callbacks are always sudden. Every time the price falls, people will be criticized. In the first half of 2010, the European debt crisis was in full swing, resulting in a strong US dollar. International copper prices fell by 25% in 6 months. But it turned out that the European debt problem became the "little episode" of the Fed's continued quantitative easing process. London copper surged more than 65% in the following 8 months, and agricultural products and energy also strengthened.

Last November, because China raised the deposit reserve ratio, the global commodity market was worried about the tightening of liquidity. Cotton and sugar in the US market have all lost more than 20% in the short term. But in the following months, it was found that China's "lifting the target", raising interest rates and even tightening policies of other non US economies almost became commonplace. In addition, the United States is still implementing the QE2 policy, and commodities continue to rise under "policy numbness". Before that, the US cotton market quickly returned to 200 cents / pound. Metal prices such as Lun copper almost did not adjust directly to climb the $10 thousand mark, and the stagflated crude oil continued to exert its strength to over 110 dollars.

Just as the situation in previous major commodity adjustments is similar, in this callback, there is no shortage of reasons for empty players. First, a major earthquake in Japan may hit commodity demand, followed by a surge in interest rates in the non US economies. Then bin Laden was killed and geopolitical impact slipped, then the issue of European debt rose again, and the US dollar strengthened again. Even the legendary cash fund managers who had never met before could be used as a pretext for empty bearers, though we may never see the exact number of fund positions.

We should not lose sight of the fact that we are looking at some "false" profits. The fact is that despite the sharp fall in demand for some industries, the prices of major agricultural products, which are more rigid in demand, are very strong. In the past few months, the price of US soybean has abnormally declined from just more than 1400 cents per bushel to 1330 cents. The price of corn in the US market also hit a record high of more than 780 cents in mid April. Even if metals, crude oil, cotton, silver and other commodities plunge sharply, their adjustment is far less than the increase over the past two years, and the great upward trend has not been destroyed.

The popularity of this year has also "lurked" a positive side. After any earthquake, all of them are faced with the reconstruction of the disaster area; whether the tide of global interest rate increase also means a bad profit; the death of bin Laden does not mean the end of the war on terror; the outstanding European debt problem does not mean that the US dollar will rise again; the volatile commodity fund may also reclaim the price after the price is adjusted. Since 2009, commodities have become accustomed to the trend of slow rise and rapid decline. Is the current round of adjustment as usual in the past, and it seems that the "turning trend" is actually "diving"?