The fundamentals suggest shortages and logistical disruptions. Russian sanctions, oil and refined product shortfalls, restrictions on grain exports, fertilizer problems, and planting disruptions. All pointed to higher prices, but price behavior through time is more complex.
Using the Bloomberg commodity index as a proxy for commodities, we now see the index at levels below the 20, 40, and 80-unit 4-hour moving average to get short-term indicator. If you did not get in when the bullets first flew (February 24, 2022), you might be getting close to a limited upside trade. If you follow the technicals on a long/short moving average model, you would be short the commodity market index on a fast model.
Margins have been rising from brokers. Volatility increases makes holding commodities riskier. The LME nickel debacle may have scared some speculators. The price action, however, is not consistent with a change in news for the better. You have all of the fundamental news at your finger-tips but the market technicals are saying something different. The trends and fundamentals diverge. Currently, following the price action will be the more prudent trade.
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