As for the future of commodities, the final decisive factor will definitely be in line with the physical price, and what really determines the trend of commodities must be the relationship between market supply and demand. If people talk about futures without market supply and demand, they will be trapped sooner or later. At present, there are all kinds of commodity trading futures markets, and the number of participants is very large. There are both institutional investors and some individual investors, especially for individual investors, who often ignore the physical attributes of goods and only regard it as a financial attribute, which will fall into the pit sooner or later. We must remember that futures is a forward transaction, and it cannot be separated from physical existence. Any futures market must have physical objects, such as crude oil, natural gas and iron ore. After understanding the underlying logic of commodity futures, it is more meaningful for us to talk about the trend of commodities.

First, interest rate hikes by European and American central banks have led to a decrease in market liquidity, and it is inevitable that commodity prices will fall. Under the background that Europe and America have successively entered the interest rate channel, the impact on commodities is very great. For example, after March 2022, global commodity prices fell sharply in the context of three consecutive interest rate hikes by the Federal Reserve. Then why did commodity prices fall so obviously in the past period after the Fed raised interest rates? In fact, to put it bluntly, the prices of bulk commodities in the previous two years were not a true reflection of market supply and demand, but more funds were speculating. For example, the real transaction price of a commodity market is only $200 per ton, but in the end, due to the influx of a large amount of funds, commodities are continuously raised to $500 per ton, which will cause a great bubble. Once the liquidity of this bubble is reduced in the market, it will be punctured sooner or later, and it is the interest rate hikes in Europe and America that puncture this bubble.

At present, the inflation pressure in Europe and America is very high, and the CPI in Europe and America is above 8%. In the face of rising CPI, Europe and America can only reduce market liquidity by raising interest rates continuously. After the market liquidity decreases, the cost of borrowing money from other financial institutions rises, and the threshold for borrowing money rises. At the same time, the money borrowed in the early stage should also be paid back, so there will definitely be a lot of money flowing out of commodities and stocks. Therefore, in the context of future interest rate hikes in Europe and the United States, the decline in commodity prices is an inevitable trend. As for the bottom of commodity prices, I believe it will definitely fall back to the real relationship between supply and demand in the market. When the commodity price can truly reflect the relationship between supply and demand in the market, it will basically bottom out.

Of course, market supply and demand will also change with the change of environment. For example, in the context of interest rate hikes in Europe and the United States, market liquidity has decreased, social investment has definitely decreased, and economic slowdown in Europe and the United States is inevitable. At present, many institutions have predicted that the probability of economic recession in Europe and America is increasing. If the European and American economies slow down or even decline in the future, the market demand for commodities will definitely decrease. When the market demand decreases, the spot price will definitely decrease, and the corresponding futures price will also decrease. So generally speaking, commodity prices will fall by 30% or even more than 50% in the future, so don't make a fuss.

Second, some commodities may still remain high. Earlier, we also mentioned the underlying logic of commodities, which must be the real relationship between supply and demand in the market. It is very risky to talk about futures prices without market supply and demand. For example, in the context of current interest rate hikes in Europe and the United States, the overall price of bulk commodities will definitely continue to fall. In this context, many people will see the opportunity to short, and even many people will borrow a lot of money to short. In the context of decreasing global liquidity, there is indeed a great opportunity to short, but everyone must choose the right investment target. Not all commodities are suitable for shorting, such as crude oil.

Although the price of crude oil will fall correspondingly in the context of reduced global liquidity, in the short term, there are still many factors to support the high price of crude oil. On the one hand, the geopolitical conflict has not yet eased, and Europe's attitude towards Russian crude oil imports is still very firm, so there will still be a certain gap in global crude oil supply in the future; On the other hand, the economies of some emerging markets are gradually recovering, and the demand for crude oil in these emerging markets will increase accordingly;

Another is that some major crude oil exporting countries in the world are not very willing to increase crude oil production. If the price of crude oil falls in the future, it is not even ruled out that they may make a decision to cut production in order to keep the oil price at a high level. Therefore, on the whole, even if crude oil will drop slightly in the short term, crude oil may still fluctuate between 100 and 120 for at least the next six months to a year. At this time, whether it is short or long, there is a great potential risk. In short, for the future development direction of bulk commodities, we should not only look at the changes in global liquidity, but also pay attention to the trend of the spot market of bulk commodities at all times. In the long run, spot demand is the real determinant of commodity trends.