Focusing on the 3 C's of commodities - Crude, Copper, and Corn

 

A good way to track commodities at a high level is to follow the three C's - Crude, Copper, and Corn. Each gives you a different look at the commodities markets. Crude provides an overall look at global demand and geopolitical risks. 

• Crude moves with world growth and will be impacted by global political shocks. 
• Copper provides strong look at cyclical demand and will follow the business cycle. 
• Corn provides insight on food and weather shocks. 

Of course, there are other commodities that can be added to the mix. In the case of foodstuffs, soybeans and wheat are the other key drivers. In the case of cyclicals, we can add other metals. An inflation and safety commodity is gold.

So what has happened to the 3 C's over the last year? The trend has been down for oil, lower for copper, and no change for corn. Right now, not much is going on since the fourth quarter of last year. 

The market seems to be in a period of uncertainty on the direction of global demand. We can call this the "landing" problem. We don't know if we will have hard, soft, or no landing. Given the uncertainty, major commodity markets are in a holding pattern.