Bullish Commodities? Not So Fast | Lukas Kuemmerle
Apr 7, 2022
59:06
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Quick takeaways
Lukas is bullish on natural gas due to strong market demand in Europe and sees a potential economic slowdown as a reason to be bearish on copper.
Lukas is bearish on soybeans due to increased planting and higher yields expected in the future, while he sees wheat prices peaking after considering reduced supplies from Russia and Ukraine.
Deep dives
Bullish on Natural Gas and Bearish on Copper
Lucas is bullish on natural gas due to a strong market demand, especially in Europe with troubles keeping up with Russian imports. He sees a stronger upward seasonality and bullish positioning data for natural gas. On the other hand, he is bearish on copper due to a potential economic slowdown and the correlation between copper inventories and prices. He believes that if inventories are restocked, it could lead to a decline in copper prices.
Bearish on Soybeans and Wheat
Lucas is bearish on soybeans due to a forecasted increase in soybean planting and a higher yield expected in the future. The rising prices of fertilizers and the economic consideration of fertilizer costs influence farmers' decisions. He also sees wheat prices peaking after factoring in extreme fears of reduced supplies from Russia and Ukraine. However, he does not expect wheat prices to go much higher from current levels.
Mixed Outlook on Precious Metals
Lucas has a neutral to slightly bearish outlook on gold and silver. Both metals are influenced by factors such as real yields and industrial demand. They are affected by geopolitical tensions and economic indicators. Additionally, he notes that platinum and palladium have a more industrial use and are bearish driven by concerns about the main supplier, Russia. However, he sees a potential for higher prices if Russia's involvement in the market changes.
Bitcoin as a Digital Commodity
Lucas believes in the long-term potential of cryptocurrencies like Bitcoin and Ethereum. He sees Bitcoin as a digital commodity due to its scarcity and considers it similar to gold. While he acknowledges the difference in market drivers compared to traditional commodities, he sees Bitcoin as a store of value for younger generations and emphasizes the importance of timing investments in cryptocurrencies.
On today's episode of Forward Guidance, Lukas Kuemmerle joins Jack Farley to talk his commodity plan and interests in 2022. As someone interested not only in the strategy, but background of commodities, Lukas provides a comprehensive explanation of each of his commodity interests, discusses the current situation in Germany, and makes a case for his bullishness on Bitcoin.
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(00:00) Introduction
(02:05) Background and Framework
(05:01) Commodity Overview
(11:00) Oil & Natural Gas
(23:54) Inflation Amid Russia's Invasion of Ukraine
(26:15) Why Lukas Got Short-Term Skeptical of Commodity Prices In March
(31:07) Backwardation & Contango
(34:30) Bearish On Soybeans
(39:26) Wheat
(41:08) Shipping
(46:08) Bearish Copper
(48:50) Dollar Strength
(50:32) Germany
(55:40) Bitcoin
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