Commodity Traders Weekly Outlook: Natural Gas Slapped Again While Coffee and Cocoa Rally

Like a scratch record natural gas got spanked again after what turned out to be a week-long reprieve. Volatility continued unabashed in many assets and commodities with the rise in yields. Short squeeze dynamics and the unwind of hedges remain at play and tend to have an exaggerated impact on illiquid instruments. Weather creating volatility as it does in the ags, Arabica coffee futures surged to a near 4-month high amid concerns over tightening supplies. Brazil’s largest arabica growing region, has been hit by downpours have also caused an increase in coffee rust on some trees.

Copper rallied 2.2%, it had been a leader in the risk on movement for commodities and is a key for the bigger picture here. The Bloomberg commodity index fell 2.0% and is down 5.6% YTD.

Copper Rally Continued

February 19 -26, 2023


“High interest rates, volatile prices and the war in Ukraine have made it significantly more expensive to finance commodity trade, forcing the industry to hunt for an extra $300bn to $500bn in working capital to keep raw materials moving around the world. Changing trade patterns have made the global flow of raw materials less efficient and more costly to finance and are also likely to push up the price of commodities for consumers, according to… McKinsey. ‘Since the end of 2020, we have seen a doubling of the working capital requirements in the commodity trading sector,’ said Roland Rechtsteiner, McKinsey partner and lead author of the report. ‘We could see a similar increase by the end of next year, if [further] changes in trade flows materialise.’”

January 29 – Financial Times (Leslie Hook)

Weekly Commodity Highlights

  • Bloomberg Commodities Index fell 2.0% (down 5.6% y-t-d).
  • Spot Gold declined 1.2% to $1,842 (up 1.0%).
  • Silver lost 1.2% to $21.73 (down 9.3%).
  • WTI crude dropped $3.38, or 4.2%, to $76.34 (down 5%).
  • Gasoline fell 3.8% (down 2%)
  • Natural Gas sank 9.5% to $2.28 (down 49%).
  • Copper rallied 2.2% (up 8%).
  • Wheat fell 1.2% (down 2%),
  • Corn declined 0.4% (unchanged).
  • Bitcoin jumped $2,960, or 13.7%, this week to $24,636 (up 49%).

Weekend February 17, 2022




  • Copper futures broke back above $4.1 per pound, Chinese copper cathode prices jumped disregarding growing supply news this week inside of China.
  • Bloomberg reports put Chinese traffic levels back at the highest since the Fall of 2021. The Bloomberg traffic measures are a measurement of the top 15 Chinese cities from a vehicle registration perspective and those readings have returned to the highest level since June 2021.
  • A Chinese central bank liquidity injection was reportedly carried out to meet rising new loan demand.
  • Demand favors the bull camp and supply factors favor the bear camp.
  • “A copper deficit is set to inundate global markets throughout 2023 — and one analyst predicts the shortfall could potentially extend throughout the rest of the decade. The world is currently facing a global copper shortage, fueled by increasingly challenging supply streams in South America and higher demand pressures. Copper is a leading pulse check for economic health due to its incorporation in various uses such as electrical equipment and industrial machinery. A copper squeeze could be an indicator that global inflationary pressures will worsen…” February 6 – CNBC (Lee Ying Shan)
  • “Widespread anti-government protests are disrupting copper output in Peru, the world’s second-biggest producer, triggering predictions of a further surge in prices for the metal which has already rocketed in recent months as China’s resource-hungry economy reopens. Demonstrators demanding early elections and the resignation of President Dina Boluarte have thrown up roadblocks across the country and attacked mines, causing production slowdowns and closures in the Latin American nation’s copper operations, which account for about 10% of global supply.” February 7 – Financial Times (Joe Parkin Daniels and Harry Dempsey)

Chinese Copper Stocks

  • On the supply side, Shanghai copper warehouse stocks extended a string of large inflows with 7589 tons added to storage this week. A rise in Chinese bonded copper zone supplies of 15,900 metric tons from February 10th. A 9100-ton increase in industrial held supplies of copper in China. The latest data pointed to a bigger-than-usual inventory build-up in China over the Lunar New Year holiday despite subdued imports, raising concerns about demand. Copper inventories in SHFE warehouses jumped by 61.8% since January 20 to 226,509 tonnes on February 3.
  • Inventory in Shanghai’s bonded warehouse zone has risen from 20,400 tonnes in November to 82,000 tonnes, according to Shanghai Metals Market. This time last year bonded inventory was over 200,000 tonnes and in 2021 it was higher still at 350,000 tonnes.
  • Copper stocks registered with the Shanghai Futures Exchange jumped by 70,700 tonnes to 140,000 tonnes in the first three weeks of January before the holiday period.
  • Even allowing for more rebuild in the next few weeks, the seasonal surge is muted relative to previous years. The post-holiday peak was 168,000 tonnes last year, 200,000 tonnes in 2021 and 380,000 tonnes in 2020.
via Reuters
  • Chinese government eased curbs on property and developer borrowing at the same time they have “vowed” to boost domestic prospecting of strategic minerals and energies. The Chinese government moved to relax extremely stringent “3 red lines” policy that was directed at the Chinese real estate sector.
  • Peruvian copper production rose 15.3% in November from year ago levels.
  • Chile, the world’s top copper producer, saw production fall 6.9% in November to 449,000 tonnes.
  • Fitch Solutions revised up its copper price forecast to $8,500 a tonne in 2023 from $8,400, as demand edges higher alongside a comparatively weaker supply outlook.
  • Commodity trader Trafigura and Goldman Sachs last year both warned that global copper stocks have fallen to record lows with current inventories enough to supply world consumption for just 4.9 days
  • Glencore estimates a supply shortfall of 50 million tonnes in 2023.
  • Analysts at Goldman Sachs Group Inc. predict copper will hit a record high of $11,000 a ton within 12 months, while BNP Paribas says prices will drop to $6,465 a ton by the middle of next year as the market swings into a huge surplus.


Copper followed through with its break to the upside out of the pennant through the 50wma after it rebounded sharply off the tenkan and failed three times there in the past month. The flattening Weekly Kijun acted as a magnet with the cloud twist. We closed right at the bottom of the previous bull flag from 2021. Copper had been a leader in the risk on movement for commodities.

Weekly Copper Outlook
Copper Supply Crunch

Precious Metals

  • Spot Gold declined 1.2% to $1,842 (up 1.0% YTD).
  • Silver lost 1.2% to $21.73 (down 9.3%).



  • Gold futures weakened below $1,830 an ounce on Friday, sliding to its weakest levels in six weeks as stronger-than-expected US economic data and hawkish remarks from Federal Reserve officials weighed.
  • Cleveland Fed President Loretta Mester said she saw a “compelling economic case” for another 50-basis point rate hike. Gold declined for the third straight week, as the USD rallied with yields.
  • Gold is highly sensitive to the rates outlook as higher interest rates raise the opportunity cost of holding non-yielding bullion and vice versa.
  • Indian gold jewelry retailers are projected to see revenues jump by as much as 25% this fiscal year reportedly because of rising disposable incomes and pent-up demand from the Covid period.

“Demand for gold surged to its highest in more than a decade in 2022, fueled by ‘colossal’ central bank purchases that underscored the safe haven asset’s appeal during times of geopolitical upheaval. Annual gold demand increased 18% last year to 4,741 tonnes, the largest amount since 2011, driven by a 55-year high in central bank purchases, according to the World Gold Council… Central banks hoovered up gold at a historic rate in the second half of the year, a move many analysts attribute to a desire to diversify reserves away from the dollar after the US froze Russia’s reserves denominated in the currency… Retail investors also piled into the yellow metal in a bid to protect themselves from high inflation.”

January 30 – Financial Times (Harry Dempsey)


Gold Weekly

Gold futures successfully back tested the median after another rejection at the Tenkan (orange) moved towards the flat cloud and twist. Needs to get impulse off this ABC so double bottom gains more weight and it follows silver break higher. The yellow metal is consolidating after it accelerated after breaking the weekly triangle higher. Gold has bounced after support at its uptrend line since the August 2021 bottom and Kijun. To be bullish we need to stay above the triangle. Murrey Math resistance, watch Fibs & Chikou.

PBOC Buying Gold

  • PBOC in November added 32 tonnes of gold worth around $1.8 billion to its reserves, the first time it has disclosed an increase since September 2019.
  • PBOC in December added to its gold reserves for a second straight month, adding 30 tonnes of gold worth. Brings China’s holdings to a total of 2,010 tons.
  • China has the world’s sixth-largest official national gold reserves after countries including Russia, Germany and the United States, which is the biggest with 8,133.5 tonnes
  • The World Gold Council (WGC) said in October that central banks globally bought 399 tonnes of gold in the third quarter of 2022, by far the most ever in a single three-month period.
Gold in Perspective



  • March silver fell back under $22.4 per ounce to its lowest level since early December, as several Federal Reserve policymakers called for more interest rate hikes to combat high inflation. 
  • Bears focus on recession concerns pressured prices further, as investors worried about low demand for the metal as an industrial input for goods with high electricity conduction needs, which was reflected in its sharp underperformance to gold in January.
  • Projections of weak supply limited the fall, as COMEX inventories remained under pressure and LBMA stockpiles plunged amid outflows to India.
  • Not surprisingly, the swift gains in silver resulted in a very aggressive corrective setback with investors above $24.00.
  • Signs of low supply have supported prices, as New York’s COMEX inventories fell 70% in the last 18 months to just over 1 million tonnes. London Bullion Market Association stockpiles fell for the 10th straight month to a record-low 27.1 thousand tonnes in November.


Silver Weekly Outlook

Silver bounced off the bottom trend line and was energizes in the sphere of influence. Back over 50wma after spitting tenkan, now providing support after reversed. Closing under outer channel which is now resistance. Major support is 50wma and tenkan.

Industrial Metals

The London Metal Exchange at the end of 2022 showed the smallest available warehouse stockpiles in at least 25 years. Available inventories of aluminum fell 72% decline, zinc shrank by 90%.



  • Aluminum futures were trading under 2,400 USD/T, easing from a seven-month peak of 2,660 USD/T touched on January 25th, as fears of a global economic slowdown and rising output from China prompted investors to unwind some long positions.
  • China’s annual aluminum production in 2022 increased by 4.5% from a year earlier to a record high of 40.21 million tonnes thanks to newly launched capacity and softened power supply constraints. 
  • China has been taking significant steps to boost its economy and end the strict coronavirus-induced regime, lifting the outlook for metal demand and overshadowing global recession concerns.
  • On the supply side, last year’s output cuts at key European smelters, including Alcoa’s San Ciprian smelter and Hydro’s plant in Slovakia, lent further optimism to bulls.
  • Global inventories now stand at just 1.4 million tons, down 900,000 tons from a year ago and the lowest since 2002.
  • Aluminum hit an all-time high of around 4,100 USD/T in March 2022 in the aftermath of Russia’s invasion of Ukraine. Aluminum is down roughly 40% from that record high in March amid persistent fears of a demand-sapping global recession triggered by an aggressive tightening campaign from major central banks.
  • Alcoa reported Q4 earnings of a second consecutive quarterly loss as expected and missed on revenue. The company has been squeezed by higher energy and raw material costs and restructuring charges putting pressure on margins.
  • $AA projects 2023 total alumina shipments of 12.7-12.9 million metric tons and aluminum shipments between 2.5-2.6 million metric tons. $AA traded down 5.5% after the release.
  • In 2022 Aluminum and zinc on the LME had their worst year since 2018, with prices down 15% and 16%, respectively.
  • Tin was the worst performer, falling by more than a third and registered the biggest annual decline since at least 1990.
  • The world’s top aluminium producer, China’s primary aluminium production in November climbed 9.4% from a year earlier with 3.41 million tonnes as looser power restrictions allowed some regions to ramp up output and as new smelters started operation.
  • China is the biggest producer, accounting for 60% of production, followed by Russia and then Europe and the U.S.
  • On the supply side, LME has decided against banning Russian metal from trading and storing in its warehouses because many traders are still planning to buy the metal in 2023.
  • The car industry is the world’s largest aluminum consumer, with nearly 67 million vehicles per year, according to SkyQuest.

Technical (Alcoa)

We analyze Alcoa as a surrogate to Aluminum given its high beta relationship and more liquid aspect as an investment vehicle. $AA retested the 50Wma and 50% confluence after earnings. From there the Chikou rebalanced it closed under the tenkan. We have support below at 2/8 sphere of influence under the tenkan confluence.


Agricultural Commodities

Orange Juice touched a record high on Wednesday as plunging US output adds to tight global supply outlook. The OJ_f (Mch) climbed 10 cents to its daily limit at $2.292/lb, driving the BCOM OJ index up 86% y/y. Florida will collect the smallest crop since 1936 via Ole S Hansen @Ole_S_Hansen



Lumber prices were a leading indicator of the supply-chain problems and inflation that followed pandemic lockdowns. They are a leading indicator for the strength of the home building industry.

The CME is attempting the replace the random length with the physical futures, but they have yet to achieve the critical mass necessary for success.

The existing legacy contract is freight on board (FOB) originating in Prince George, BC. It’s a reflection of the mill price of western spruce pine fir lumber, which legacy 110,000 board feet futures contract is derived from. The new mini lumber is FOB Chicago, so the premium of $105 represents the additional from delivering to the mill in Chicago. That’s the reason the premium in the mini. Secondly, the new contract has the ability for producers to deliver western SPF, eastern SPF, domestic and Canadian Doug Fir, and U.S. Hem Fir. Depending on the species and delivering mill, the FOB is anywhere from $80 to $105 premium to the legacy contract delivered to Chicago. Lastly, the new contract is sunset out of existence with the official and permanent expiration on May 15, 2023.

Greg Kuta, the President of Westline Capital Strategies,


  • Chicago lumber futures moved sharply lower after spitting the weekly Kijun. For now, they are trying to bottom below the $400 per thousand feet mark as persistent fears of a demand-sapping global recession prompted some profit-taking after a massive rally drove prices to an over three-month high in early February. 
  • Selling came with news US Housing Starts Fell to a 31 Month Low in January While Building Permits Rise
  • Fundamentals in the lumber complex had supported tight supplies and prospects of a rebound in-home construction and demand recovery.
  • The benchmark remains down roughly 70% since its May 2021 peak of around $1,700, when supply chain issues compounded strong demand.
  • Positive news came from the NAHB Housing Market Index Rising for a Second Month After Twelve Consecutive Monthly Falls
  • U.S. Pending Home Sales Rise 2.5% in December as Real Estate Market Stabilizes
  • US New Home Sales Rose 2.5% in December as Lower Mortgage Rates Spur Some Buying
  • Worth noting that before 2018, the price never eclipsed $493.50.
  • In January 2023, nearby March random-length lumber futures were sitting at the $417.70 level, with the new physical futures at $525.00.
  • In March 2020, random-length lumber futures fell to $251.50 per 1,000 board feet as the global pandemic gripped markets across all asset classes. When commodities exploded higher over the following months lumber rose to $1,711.20 as supply chain and other issues created a shortage. In an almost perfect bullish storm for the lumber market, historically low interest rates caused a housing boom, increasing the demand for lumber when supplies were low. 
  • The Federal Reserve’s aggressive tightening cycle has briefly pushed 30-year mortgage rates to levels not seen since 2001, leading to slower home construction and souring sentiment among homebuilders.
  • The war in Ukraine and the tightening sanctions against Russia and its ally Belarus, which account for more than 10% of the global export of lumber, had squeezed global supplies.
Lumber Futures




  • CBOT wheat futures held above $7.6 per bushel, close to a near-seven-week high of $7.99 hit on February 14th, as concerns about supply disruptions from the Black Sea region continued to hang over the market, while a stronger USD and higher interest rates expectations from the Fed kept gains in check.
  • Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought 76,203 tonnes of food-quality wheat from the United States, Canada and Australia in a regular tender.
  • World wheat production and stockpiles are forecast to tighten, the IGC said, without giving figures
  • Sowing in Ukraine is “tentatively seen sharply lower” and there’s uncertainty about agricultural activity in uncontrolled territories
  • In its February WASDE report, the US Department of Agriculture projected increased supplies, consumption, trade, and stocks for 2022/23, with higher production by Russia and Australia and higher feed and residual use by Canada, EU, and Russia more than offsetting lower food, seed, and industrial use by Bangladesh.
  • FAO estimated 2022 wheat production at a record 794 million tonnes, prompted by larger output from Russia and Australia. Wheat production in Australia is seen to have reached a historic 37 million tonnes in 2022-23, while Russia also reported record harvests and stocks.
  • Despite recent precipitation in Argentinian farms, rainfall was deemed insufficient to erase previous drought concerns.
  • Australia forecasted its crop to reach historical 42 million tonnes in the same period. USDA-FAS is now estimating that Australia will post a record-breaking wheat production of 1.360 billion bushels during the 2022/23 season. Estimates were based on ideal conditions in western and southern Australia partially offset by excessive rains in New South Wales.
  • South Korea purchased approximately 2.5 million bushels of animal feed wheat, likely sourced from Australia, in a private deal that recently closed. The grain is for arrival by the end of June.



Wheat support is now the tenkan and resistance the 50 and 61.8% Fibs. It had been drawn higher by the flat weekly cloud and supported by 0/8 which held. The contract keeps failing to stabilize after it continued its sharp impulsive collapse. This came about after a failure at retesting the 8/8 move and high after it spat 8/8, and the minimum target. It had completed a measured 4/8 correction off highs then broke key support at 38% then 50% and 50wma confluence in the freefall.



  • March Chicago corn futures have been trading around $6.75 per bushel since mid-January, slightly below the $7 levels seen last November, as investors continue to assess production and demand prospects.
  • Buenos Aires Grain Exchange releases weekly report says 2022-23 corn area held at 7.1m ha and Corn planting 100% complete
  • In Ukraine corn acreage is expected to see a “slight uptick,” while barley plantings should fall. Sowing in Ukraine is “tentatively seen sharply lower” and there’s uncertainty about agricultural activity in uncontrolled territories.
  • The ongoing war in Ukraine, which accounts for 15% of global corn exports, alongside late planting in the US and dry weather in South American countries, continued to weigh on production.
  • The US Department of Agriculture estimated total corn production in 2022 at 13.730 billion bushels, down 1.4% from the latest November estimate and 9% from the 2021 estimate of 15.074 billion bushels.
  • Demand from top consumers US and China, especially in industries such as the animal feed sector, has seen further pick-up. China is set to boost corn purchases following its economy reopening after prolonged COVID-19 lockdowns.
  • Ukrainian consultancy UkrAgroConsult reports that the country’s 2022 corn production has reached 992.1 million bushels, with harvest at 90% completion. Average yields were 98.9 bushels per acre.
  • Argentina’s corn production potential slashed by 11% to 1.752 billion bushels from lack of rainfall in Argentina, the world’s largest exporter of soybean oil and meal and the third-largest exporter of corn, has slowed the planting of its current corn and soybean crops and nearly halved its wheat output.
  • Brazilian consultancy Safras & Mercado trimmed its estimates for the country’s first corn crop to 933.8 million bushels, citing drought in the production state of Rio Grande Do Sul. However, Safras & Mercado is also anticipating a record-breaking second corn crop, with an estimated production of 3.454 billion bushels.


Corn Futures Outlook

Corn failed to hold last week’s price action failing towards the Kijun after a 7/8 fail to close under the weekly cloud and under the 50wma. Earlier in the year Corn had topped out at the highest since 2012 in Chicago at +1/8 and corrected with impulse back to break the Tenkan which it swiftly did a spit of a spit after bouncing off 720, which also the price successfully retested the high from April 2021. From here we saw Tenkan fail again. Which is back where we are.



  • Soybean futures traded around $15.2 per bushel, hovering close to their seven-month peak of $15.55 hit on February 13th, on the back of solid demand expectations, particularly from China after the country lifted its harsh pandemic controls.
  • The Brazilian record crop harvest and a stronger dollar, helped by higher interest rates projections from the Federal Reserve, are likely to weigh on the market. Brazil’s soybean production for the marketing year 2022/23 is forecast to reach a historical 153.5 MMT, despite fears over heavy rains in key producing regions impacting harvest. 
  • Brazilian soybeans began trading at a discount to the CBOT the prior Friday for the first time after 20 months of premiums. The reason for the change from a premium to a discount for the March maturity was the advance of sales by farmers and lower-than-expected Chinese demand this week
  • Data from the US Department of Agriculture confirmed private sales of 130,000 tonnes of soybeans for delivery to unknown destinations in the 2022/23 marketing year. At the same time, the weekly export inspection data showed 1.806 million tonnes of soybeans were inspected for export in the last week, below 2.190 million tonnes in the week before.
  • India’s sunflower oil imports are expected to reach record levels in January, with an estimated 473,000 metric tons as top exporters Russia and Ukraine are both drawing down their large stockpiles. “[Recent discounts] made it lucrative for Indian buyers,” according to Rajesh Patel with GGN Research.


Soybeans Weekly Outlook

Soybeans after it rejected new lows at the bottom of trendline finally got the legs to break above the 50wma. The 50 wma and the tenkan are both under the Kijun providing heavy resistance. We sit near the January breakup. The weekly cloud and Murray mingle around the $14.9/bushel benchmark.

Recall beans broke down from the bull pennant framed by +4/8 and +1/8 with the Kijun unable to sustain support right at the breakout. Support at the 50wma gave way to under the futures pivot at $15/bushel benchmarks and at the close of the week was a magnet to the recovery bounce. Pressure came from futures spitting the Weekly +4/8 over $17.50/bushel three times. The market needs to rebalance that energy.


For complete Oil and Natural Gas Coverage please visit our dedicated publications ‘Around the Barrel’ and ‘Into the Vortex.’ – Weekly Analysis and Outlook for Energy Traders and Investors

WTI Weekly KnovaWave Shape
US Natural Gas KnovaWave Weekly Grid

BDI Freight Index

Baltic Dry Index Weekly

For a Complete Macro and Micro Market Overview Visit TC Traders Market Weekly:

Five Factors in a Constructive Strategy for Investing in Commodities

Investing in commodities is something that needs to be done within a constructive strategy to understands risks and opportunity. There are many factors to consider individually depending on one’s access, location and financial position. Five factors to consider are monitoring the market, monitoring supply and demand dynamics, diversification, long-term focus and dollar cost averaging.

Focus on yourself and what YOU CAN INFLUENCE, set your trading plan and goals in be set for 2023.

-comment section below data-

Real Time Economic Calendar provided by

Subscribe and Follow

Find us at

Follow our contributors on Twitter @traderscom @thepitboss16 @knovawave @ClemsnideClem

Note these charts, opinions, news, estimates and times are subject to change and for indication only. Trade and invest at your own risk.

Trade Smart!