The Ultimate Commodity Update
Those Fools who have been around the Sinchi block a few times may recall the first iteration of the Ultimate Commodity Update from back in March ... when there was virtually no consensus from any corner of the globe about the outlook for demand recovery. At a moment when even China's rip-roaring growth rate appeared susceptible to the paralysis affecting every other corner of the planet, Joy Global urged investors to watch for demand recovery in stages: first stabilization, and then recovery. China's massive stimulus package combined with a constant flow of strategic asset and resource purchases provided the stabilization, which provided a bridge to the additional boost from the now-completed steel industry destocking event in Europe and the U.S., which in turn brings us straight into sustainable demand recovery from China, India, and emerging markets. Last quarter, they expressed some concern over a potential interruption between the demand from Chinese stockpiling and whatever baseline level of global demand exists beneath it, and I think that is still a risk to some degree. I think their analysis was brilliant throughout, and investors who followed Joy Globals' sage analysis and positioned themselves early for the resumption of commodity demand will reap benefits for years to come.
With that in mind, please feast your eyes on the second edition of the The Ultimate Commodity Update
Please don't forget to vote in the poll at the bottom of the article. I always enjoy gauging the community's perspective on the topics that interest us ... I hope you enjoy that as well. I've been using the poll feature very frequently lately ... is it a welcome addition to the articles??
After you vote, come back here and discuss your vote, if you wish. What is your outlook for commodity demand during 2010? Do you see a minor hiccup or a major correction when stockpiling efforts cease? For that matter, has anyone among us come across recent data to update what we do know about their stockpiling efforts. I haven't seen direct data about stockpile purchases (imports net of monthly consumption) in at least a few months. I have expected some kind of a correction in products like copper, but so far we've seen no signs of price weakness. Is it possible that stockpiling effort did indeed provide a smooth bridge to underlying consumption-rate demand? What do you think? Perhaps you think I'm wrong to dismiss the role of U.S. and European demand?
Also, the Global Gains guys just returned from India with some bullish things to say about the infrastructure build-out there. The projections from Joy Global and Peabody Energy regarding India's future levels of demand for thermal coal appear well corroborated. Have you Fools staked your claims in the seaborne thermal coal space? What's your vehicle for that exposure?
What is your posture toward commodities right now? Are you accumulating? Holding? Waiting? Avoiding?
Thanks for sharing your thoughts ... each one is worth at least a dime. ;)