For a long time, the Baltic Dry Index was one of the go-to indicators of the global commodity trade. No more, as you can see versus Brent crude oil, pictured above (these are the cumulative percentage changes in each since the end of 1996) — or other commodity charts that you could choose.
What’s the difference? A quick scan of the news about dry bulk shipping includes items on both supply and demand, with a well-documented increase in capacity on one hand and some murkier reports of softer demand for ships, maybe even related to a slowdown in China.
Conversely, there are all kinds of concern about the supply of oil and seemingly a persistent “bid” for it from the engines of the global economy (although that doesn’t square with the concern of a softer China cited above). The main question at this juncture seems to be whether that demand will soften as end users modify their behavior. As in 2008, there are signs of that occurring.
Silver cracked hard overnight, coincidentally near the hour that the New York Times posted a story about getting “that great-aunt’s tarnished tea service” out of the attic to raise some extra cash. We’ve seen lots of one-way trades in the commodity markets. The next phase would seem to be identifying those specific commodities for which the demand really is relatively inelastic and increases in supply are hard to muster. (Chart: Bloomberg terminal.)