By Jeremy Schwartz, CFA, Executive Vice President, Global Head of Research, WisdomTree
Last week, we had the pleasure of hosting Ed Morse, head of commodities research at Citi, on our Behind the Markets podcast to discuss his outlook for commodities.
Most commodities today have seen a lack of investment in new exploration, particularly across metals. The incremental demand, with supply constrained, pressures prices higher.
Commodities today are generally in contango, where the futures price is higher than the spot price, but Morse sees this changing to a case of backwardation, where the futures price becomes lower than the current price. This will change the environment for the monthly rolling of futures contracts, going from a cost to a net positive for investors in futures.
This was also the case for the last super cycle for commodities. We had a strong market that was in backwardation, so investors were paid to