The commodity outcome is inevitable...

Five (5) new independent BUY recommendations for Glencore International Plc. were presented in Europe this morning. Unless you're a shareholder or potential shareholder of Glencore, who cares, right? Wrong!

Glencore, the global leader in commodities marketing, has three principal business segments: Metals & Minerals; Energy Products and Agricultural Products. China is the world's biggest consumer of commodities and given that the latest Chinese PMI (50.1) is one bip away from a suggested economic contraction, why the unanimous optimism? The CRB index, a commodities price index, broke down through its 200dma on Monday earlier this week. It's an amusing BAD news + BAD data = BUY equity.

So what are we missing?

1. Obama authorised the release of oil from the SPR (Strategic Petroleum Reserve) which negatively affected crude prices. It's a short-term aberation.
2. China's forecast GDP growth for 2011 is 9.3%.
3. India's forecast GDP growth for 2011 is 8.75%
4. The FFPI, a food price index, is a touch below its all-time high. Politics, weather and limited arable land continues to plague food supply. Demand for food as the world's population explodes will inevitably outstrip supply.
5. Oil reserves will eventually run out... 
6. The earth is not replenishing its metals & minerals...
7. More people will eat more food...

Some cynically suggest that Glencore's recently timed listing signalled the top of the commodity market. Even so, if we agree that price is a function of supply and demand, then you might want to pay more attention, long-term, to Glencore's comings and goings.