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Commodities and a View that Deflation is Done

Originally published by AgriNews on May 30, 2018 Read the original article.

You may have heard the phrase, “Stick a fork in it,” which is a way of saying “It’s done.”

Well, one author expresses the view that the price deflation for commodities is done. Indeed, a chapter in his new book is titled “Stick a Fork in Deflation.”

You can get some of the details by reading this May 30 article excerpt from AgriNews:

Here are a few individual commodity markets that … are breaking above their respective trading range: Crude oil prices rose to a four-year high this week and so did cotton prices.

Corn prices hit levels not seen since last August. Prices for orange juice hit a one-year high.

Lumber prices have jumped more than 50 percent since January to all-time record high levels. Wheat prices in Kansas City and Minneapolis are at new 10-month highs.

Certainly, other commodities remain defensive such as livestock and a few tropic markets, but the weakness with those markets is not offsetting the strength elsewhere.

And that is the reason the CRB has been clawing its way higher and breaking above its trading range. The rise with the CRB hints of inflation. …

In my new book, “Haunted by Markets,” there is a chapter entitled “Stick a Fork in Deflation” from a column I penned for this newspaper in January 2000. Here is the first paragraph from that chapter:

“The Era of Deflation for commodity values that unfolded three long years ago due to the Asian Crisis has ended. It is a thing of the past. It is history. The coming year and those that follow will give birth to the most bull markets for commodity futures seen in quite a while. Possibly since the 1970s!”

The second paragraph from “Stick a Fork in Deflation” read as follows: “Certainly, it does not mean I am right. I could be wrong. The coming year and those that follow may be just as bearish and just as ugly as the past three years. Still, my long-term work strongly suggests that few commodity markets will move lower in value from current levels. Then again, only with hindsight will we know for certain whether I am wrong or right about what lies ahead. But I’m betting that bull markets lie ahead.”

In the year 2000 and the years that followed, virtually every commodity market rose sharply in value. It was not until 2007 when the U.S. and global economies slipped into the worst recession since 1929 did commodity values roll over and head south.

But with the benefit of hindsight, we now realize that those bullish commodities starting in 2000 did quite well for a number of years buying breaks rather than selling rallies. …

[H]ang on tight because a bout of inflation is poised to heat up and a new and exciting era lies ahead for ag producers and speculators.

Yes, once again and similar to 2000, a fork can be stuck in deflation. Inflation has arrived.

The May 2018 Elliott Wave Financial Forecast has an entirely different perspective on commodities, as well as other asset classes:

During the last bear market, gold, real estate, commodities and nearly all other assets declined in concert with stocks. As far back as 2004, EWFF recognized the converging trends of disparate assets with “EWI’s all-the-same-market theory of synchronized trends in the financial markets.” In March 2018, we stated that it was likely to re-emerge as financial assets of every stripe, including government bond prices, fall in line with a decline in stocks.

Elliott Wave International encourages you to read the FREE REPORT: “What You Need to Know NOW About Protecting Yourself from Deflation.”

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