Global Commodity Market Wrap-Up

Last week, the metals market recovered from recent lows, with both precious and base metals bouncing back after declines. Gold surged by 5.35% after hitting recent lows, while silver saw a modest rise of 2.98%. Base metals also experienced slight gains, with copper slipping 0.48%, lead rising robustly by 4.17%, and zinc seeing a small uptick of 0.29%. This shift from the previous week’s relative stability reflects a change in market sentiment, as evolving investor outlooks and varying demand dynamics impact different metal sectors.

Last week, natural gas prices rose by 6.17%, fueled by supply constraints and increased seasonal demand. Crude oil prices climbed by 6.46%, supported by persistent market uncertainty and changing investor sentiment. In the agricultural sector, U.S. sugar prices bucked the broader downward trend, falling by 1.10%, while other agricultural commodities showed mixed performance. This divergence between the energy and agricultural markets reflects varying supply and demand pressures, with investors adjusting to shifting global conditions and economic uncertainty, signalling a dynamic and cautious market outlook.

Global commodity prices have recently rebounded from their lows, driven by various global factors. Precious metals are maintaining strong support levels, suggesting a positive outlook. In the energy sector, natural gas is gaining momentum, while crude oil prices are stabilizing at key support levels. Agricultural commodities, however, are experiencing mixed results, reflecting varied conditions across the sector. This diverse market performance indicates a cautious but optimistic approach from investors, as they adapt to shifting economic and geopolitical conditions.

The upcoming Micro and Macroeconomic events that may impact market sentiments include an update on CB Consumer Confidence, New Home Sales, GDP and Core PCE Price Index.

Having understood the global commodities performance over the past week, taking cues from major global economic events, and based on technical analysis, noted below is the recommendation with the generic insights, entry price, target prices, and stop-loss Soybean Oil January Future (CBOT: BOF25) for the next 2-4 weeks duration:

Soybean Oil January Future (CBOT: BOF25)

Price Action and Technical Indicator Analysis:

In January, soybean oil futures are showing strong performance, with bullish momentum building following the formation of a green candlestick, indicating potential for further upside. Prices hold above a crucial horizontal support level, and increasing trading volume suggests a possible trend reversal. On the weekly charts, a key support level reinforces the positive outlook. The Relative Strength Index (RSI) at 40.643 points to rising momentum, while the 21-period Simple Moving Average (SMA) provides additional short-term support. These technical indicators collectively suggest that soybean oil may continue its upward movement soon.

Now the next crucial resistance levels appear to be at USc 45.72 and USc 47.00, and prices may test these levels in the coming periods (2-4 weeks).

As per the above-mentioned price action and technical indicators analysis, Soybean Oil January Future (CBOT: BOF25) is looking technically well-placed for a ‘Buy’ rating. Investment decisions should be made depending on an individual’s appetite for downside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. Technical summary of the ‘Buy’ recommendation is as follows:

Upcoming Major Global Economic Events

Market events occur on a day-to-day basis depending on the frequency of the data and generally include an update on employment, inflation, GDP, WASDE report, consumer sentiments, etc. Noted below are the upcoming week's major global economic events that could impact commodities’ prices:

Futures Contract Specifications

Disclaimers 

Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.80:1.00), however, returns are generated within a 2-4 weeks’ time frame. This may be looked at by Individuals with sufficient risk appetite looking for returns within short investment duration. The investment recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the commodities has not been considered in the decision-making process. Other factors which could impact commodity prices include market risks, regulatory risks, interest rates risk, currency risks, and social and political instability risks etc.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: Individuals can consider exiting from the commodity if the Target Price mentioned as per the Technical Analysis has been achieved and subject to the factors discussed above.

Note 3: How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50- period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the commodity. Commodity with high volumes is more liquid compared to the lesser ones. Liquidity in commodity helps in easier and faster execution of the order. 

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or Selling interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or Selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

Risk Reward Ratio: The risk reward ratio is the difference between an entry point to a stop loss and profit level. This report is based on ~80% Stop Loss of the Target 1 from the entry point.

The reference date for all price data, volumes, technical indicators, support, and resistance levels is November 25, 2024 (Chicago, IL, USA 00:00 AM (GMT-6). The reference data in this report has been partly sourced from REFINITIV. 

Note: Trading decisions require a thorough analysis by individuals. Technical reports, in general, chart out metrics that may be assessed by individuals before any commodity evaluation. The above are illustrative analytical factors used for evaluating the commodity; other parameters can be looked at along with additional risks per se.