MacroVoices #399 Ole S Hansen: Still Bullish Commodities

This episode features Ole Hansen, Saxo Bank's Commodity Chief, discussing the ongoing commodity super cycle. Hansen argues that while commodity prices have corrected significantly from recent highs, the fundamental bullish thesis remains intact, driven primarily by supply constraints rather than demand factors. He emphasizes how market fragmentation, reshoring/friendshoring of production, green transformation needs, and tight supply across multiple commodities support higher prices. A key focus is on backwardation versus contango in commodity futures markets, which Hansen explains is crucial for investment returns through roll yield. He notes that many commodities are now in backwardation, providing positive roll yields for investors, contrasting with the contango environment that prevailed for much of the past decade. Hansen discusses specific commodities including crude oil, where he sees geopolitical risks but believes spare capacity limits upside potential. He's particularly bullish on industrial metals like copper and aluminum for the energy transition, arguing current prices are too low to incentivize necessary production increases. In precious metals, Hansen explains gold's recent rally as driven more by short covering than safe haven buying, with rising yields paradoxically becoming supportive due to concerns about financial system stress. He maintains a 'patient bullish' outlook for gold, expecting significant upside once peak rates are confirmed. The discussion also covers agricultural commodities affected by weather patterns, with El Nino impacting southern hemisphere production while northern hemisphere crops remain robust.