SIAT Member. Chairman of the Investment Committee of ABS Consulting SCF. Founder of Mazziero Research
Financial analyst, Professional member of SIAT, the Italian Technical Analysis Society, expert in commodity markets as well as diversified portfolio construction with ETFs and ETCs. Chairman of the Investment Committee of ABS Consulting SCF.
Founder of Mazziero Research, with activities ranging from the publication of reports and analyses for banks as well as companies and assistance to define appropriate strategies to hedge commodity risks.
Lecturer in training courses for Universities, stock exchanges, corporates and banks, he performs the commodities course of Master SIAT Advanced.
Author of numerous studies and books, including “Guide to Technical Analysis” and “Investing in Commodities” in addition to the quarterly Italian Debt Observer, Scientific Journal on Public Italian Accounts (ISSN 2283-7035 CINECA No. E230240).
He is often invited as an expert in markets and economics at conferences, seminars, business conventions and radio TV programs.
COT and forward curves as reversal indicators for commodity prices
Commodity prices are tied to supply and demand of physical goods; the so-called “commercials” are in possession of important information about the costs of production and storage, as well as of volumes of production and the general state of the equilibrium in the market. For this reason, observing their behaviour can offer insights as to the level of under or overvaluation in a given market. At the same time, the forward curve of a commodity should always be in contango, with an upward-sloping difference between the near month and longer maturities due to the costs of storage and maintenance. However, there are times when supply and demand are out of balance, causing the forward curve to go into backwardation, with a downward slope between the near month and longer maturities.
It follows that an analysis of the graphs of the positions of the commercials in the CFTC Commitments of Traders Report, together with an analysis of the evolution of the forward curve, can help to identify the main inversion points for commodities prices.
The presentation explains which approaches to adopt and how to avoid the traps of this method of analysis.