ISM vs Commodity Prices
The latest ISM Manufacturing data came in lower than expected. It almost seems like economic momentum in the US is fading. But on the other hand, commodities that are most sensitive to change in economic momentum, namely copper and crude oil, remain in a sideways consolidation or in the case of crude are already breaking out to new short-term highs.
That price action behavior opens up a gap between both metrics, and one thing is clear. The ISM data or commodity prices have to give in at the end.
As we think that we’re in the late stages of this economic cycle - we see the case that copper and oil prices will drop while the ISM data remain muted. But we have no strong opinion about economic momentum. It determines in the case of copper and oil our position sizing - but that’s it. Our investment process, idea generation, and alpha generation are not reliant on economic conditions.
Upcoming Rice Price Explosion?
Indian rice exporters are facing random and sudden freight cancellations amid an acute container shortage in the region, market sources told S&P Global, likely tightening the shipped volumes in the coming weeks. If the shortage persists, India's rice exports forecast may be revised down
The unprecedented surge of up to 150% in ocean freight rate by shipping lines has severely impacted the rice exports industry in India, a Delhi-based exporter said. The whole situation is discouraging the exporters from doing any business, he said.
50% of Indian rice exports happen typically through containers and the other 50% through breakbulk. However, the recent surge in freight rates has prompted a shift, with 90% of shipments now using breakbulk and only 10% using containers.
Various rice exporting associations have approached the government of India to intervene in the matter, sources said. So far, the price of rice in the US has reacted bearish and has recently also broken down at an important supply level - leaving prices vulnerable to further downside risks at the moment from a technical perspective.
In Other News…
Some news you don’t see at the bottom of a stock market.
This week, look out for the following:
Fed Chair Powell Testifies on Tuesday and Wednesday
CPI data on Thursday
PPI data as well as University of Michigan Consumer Sentiment and the latest WASDE Report on Friday
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Till next Monday, Lukas
If you have any questions in the meantime, please feel free to contact me via X or Mail.