April 2021 Edition Bloomberg Commodity Outlook 2021

Bloomberg Commodity Outlook

Bullish Innovation

Commodity Supercycle? Tech Innovation Says Good Luck With That

What's New in Crude Oil? The Bear Market Meets Good Resistance

Copper $9,000 Resistance vs. $1,700 Gold Support; Metals Winning

Old-Guard Gold Appears Ready for Nap Time vs. Young Bitcoin

New vs. Old Economy: Agriculture Price Downside vs. Innovation

April 2021 Edition Bloomberg Commodity Index (BCOM)

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April 2021 Edition Bloomberg Commodity Outlook 2021

Contents

03 Broad Market Outlook

05 Energy

08 Metals

13 Agriculture

Data

15 Performance

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April 2021 Edition Bloomberg Commodity Outlook 2021

Data and outlook as of March 31, 2021

Mike McGlone – BI Senior Commodity Strategist

BI COMD (the commodity dashboard)

Note ‐ Click on graphics to get to the Bloomberg terminal

Commodity Supercycle? Tech Innovation Says Good Luck With That Performance: March -2.1%, 2021 +6.9%, Spot +7.6% (Returns are total return (TR) unless noted)

(Bloomberg Intelligence) -- This year is shaping up as a key test for buoyant commodity prices, and we expect a dynamic similar to the pre-pandemic one -- with supply elasticity to overwhelm demand, on the back of advancing technology. The about $100-a-barrel recovery in West Texas Intermediate crude oil may mark a peak in 1Q and could be as enduring as the 2020 negative price low. It's unlikely that crude oil can sustain a level above the March highs, with trickle-down risks for all and notably for the majors: copper, corn and soybeans. Enduring trends support this bearish scenario. The metals sector is a likely standout, but has a rising nemesis in Bitcoin. The digital reserve asset represents innovation and reflects deflationary trends, and is replacing gold in investor portfolios.

Innovation Upper-Hand vs. Commodities Innovation Backers Set to Counter Commodity, Inflation Bulls. There's elevated risk that the crude-oil price bounce ended in 1Q, with bearish implications for broad commodities, inflation and bond yields, we believe. Oversupplied amid slack demand was the crude condition before the pandemic. Accelerating innovation is boosting commodity supply at a greater pace than demand, in addition to replacing gold. Crude-Oil Peak Potential, Trickle-Down Iterations. Reversion lower is the greater risk for crude oil and broad commodities at the start of 1Q, we believe. Since the West Texas Intermediate crude-oil plunge in 2014, the price has averaged about $51 a barrel. It was around $60 at the end of 1Q after reaching a high of about $68, and risks are now tilted toward reversion. Our graphic depicts the world's most significant commodity bumping up against resistance near $70 that has held prices in check for about seven years. The convex shape of electric-vehicle sales suggests demand for metals and the opposite for crude.

Unfriendly Trends for Commodities, Inflation

If crude stays the course since the financial crisis, we see limited further upside potential for energy-connected agriculture: corn, soybeans and sugar. Down about 40% since 2006, the Bloomberg Commodity Index Total Return faces similar headwinds. Looking for Inflation? Start With Natural Gas. The colder-than-normal 2020-21 winter was a good test of natural gas, and the bear proved resilient, with deflationary implications for broad commodities and bond yields. If the world's benchmark measure for the cost of heat and electricity can't sustain a rally, there's little reason to expect similar moves in inflationary drivers from commodities. Our graphic depicts the clear downward trajectories of natural gas, the Bloomberg Commodity Index Total Return and U.S. Treasury 10-year yields, notably since the financial crisis. Trends Your Friend - Downward for Inflation

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April 2021 Edition Bloomberg Commodity Outlook 2021

If this ebbing tide is to reverse, natural gas should play a leadership role. In 2009, the first full year that the Federal Reserve target rate was zero, gas averaged about $4 MMBtu. The price at the end of March is closer to $2.70 despite rapidly rising global demand. Is Crude Oil in 1Q Just a Bear-Market Bounce? If crude oil can maintain the gains it made in 1Q, there's potential for similar increases in broad commodities, but we see risks tilted toward downward trends. The 2021 WTI crude average price of around $58 a barrel through March 31 appears elevated vs. the mean of almost $51 since 2014. Our macroeconomic performance scorecard highlights the increasing reliance on a rising stock market. Risks of reversal are elevated in 2021's top performers -- crude oil and copper -- vs. moribund gold and bonds, if the stock market succumbs to some mean reversion. Crude Oil, Copper Dependent on Higher Equities

The highest-ever stock-market cap to GDP and the Bloomberg Commodity Index correlation to the S&P 500 (0.82, 20 quarters) emphasize the fragility of the 1Q bounce in broad commodity prices. Potential inflation may be the most dependent on rising equities in modern history. Direction of Energy, Precious Metals. Even if the stock-market tide keeps rising, oversupplied crude oil faces headwinds similar to the peak in 2018, which was below the 2014 and 2008 highs. Crude oil is a bear market that has bounced, as we see it. Precious metals, at the bottom of our 1Q sector scorecard, has a legitimate and sustainable headwind with gold being replaced by Bitcoin in investment portfolios. The benchmark precious metal is backing into layers of support. But until the fund-flow pull toward equities and Bitcoin recedes, upside appears limited for gold.

Energy Facing Plenty of Headwinds

The industrial-metals sector is among the most dependent on rising equity prices, but we expect base metals to stick to the more enduring trend of outperforming energy. Supply elasticity is likely to pressure grain prices and agriculture absent a drought in the Corn Belt. Curve Analysis – Contango (-) | Backwardation (+)

Measured via the one-year futures spread as a percent of the first contract price. Negative means the one-year out future is higher (contango). Positive means the one-year out future is lower (backwardation).

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April 2021 Edition Bloomberg Commodity Outlook 2021

Energy (Index weight: 19% of BCOM) Performance: March -3.6%, 2021 +17.3% , Spot +17.5%

Has Crude Oil Peaked? What's New in Crude Oil? The Bear Market Meets Good Resistance. The probability of the pandemic reversing unfavorable crude-oil price trends is low, with primary risks tilted toward more of the same bear-market conditions. There's an elevated chance of the 1Q price peak marking the limit of the bounce from 2020's swoon. Bullish crude oil may be considered bearish innovation. Crude Oil More Likely to See $50 Than $70. With technology-driven energy sources rapidly replacing fossil fuel, there are few bullish post-pandemic signs for crude oil prices. We believe the recovery from last year's plunge is temporary within a broader bear market. It's unlikely the 2020 West Texas Intermediate crude oil future low close of minus $37.63 a barrel will be exceeded, while the $100 rally to this year's $66.09 high may mark a similarly enduring peak. Our graphic depicts crude oil's primary headwinds -- diminishing incremental demand due to the proliferation of electric vehicles, and the U.S. shift to net exporter.

Crude Oil Bounce May Have Peaked In 1Q

EV innovation and adoption is accelerating suddenly, not gradually, while U.S. liquid-fuel consumption is about the same as 20 years ago, with efficiency negating demand.

Commodity Inflation? Natural Gas Says No. Innovation is unfavorable to prices on both sides of the crude oil demand vs. supply balance. Natural gas is a good example of the meager price-inflation prospects in fossil fuel. Despite strong global consumption, natural gas has been unable to rally, notably due to rapidly increasing U.S. production and LNG exports, driven by innovation. The demand vs. supply outlook may be worse in crude oil. Our graphic shows about a 34% 10-year rate of change in global natural gas consumption to 2019 vs. 20% in 2001, according to the BP

statistical review. At 17%, global crude oil incremental demand has declined from about 20% in 2004.

Crude Oil May Be at Greater Risk Than Gas

Oil-importing countries may be following former world leader the U.S, now a net exporter. About a decade ago, the U.S. imported about 15% of global production.

Moribund Natural Gas a Fossil-Fuel Leader. The per-barrel price of Brent crude at quarter's end is elevated at $64, and we believe it's more likely to continue backing away from the March high just above $70. Historically, a rising stock market has been a prerequisite to higher crude prices, which adds risks to oversupplied fossil fuel. At the bottom of our 2021 scorecard, natural gas shows a more likely path for crude oil prices. At least global incremental demand (about 30% on a 10-year basis) for the cleanest fossil fuel is on the ascent. Spurred by innovation, rapidly rising U.S. supply is keeping a lid on natural gas prices.

Bear-Market-Bounce Risks Elevated in 2021

Juxtaposed is crude-oil demand running closer to 15% and in incremental decline. Advancing technology is increasing supply elasticity, and the recent price bounce promises more of the same -- too much production.

WTI Crude Oil Gravity Pull Toward $50. U.S. production costs signal that West Texas Intermediate crude oil is as vulnerable as it was near the 2018 peak. Our graphic depicts average breakeven pricing from the BTUS <GO> function dropping to the lowest in the database since 2014 to about $39 a barrel vs. closer to $61 for the front WTI future on March 22. Even if optimistic outlooks for a quick return to pre-Covid-19 demand pan out, U.S. producers have plenty of incentive to continue supplying more crude oil than is demanded.

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April 2021 Edition Bloomberg Commodity Outlook 2021

New Low for U.S. Crude Oil Production Costs

The average has been just above $50 since the big breakdown in 2014 from more than $100. Significant sustained supply constraints are unlikely, decreasing the likelihood of breaching $70. We believe status quo conditions will pressure the price toward its $50 mean.

Responsive Sellers Rule Natural Gas. Natural gas at about $2.70 per million BTUs on March 11 hasn't spent a meaningful amount of time above $4 since 2014, and we see little reason for change in the moribund market. The 25-year low close at $1.48, due to the 2020 risk-off swoon, appears enduring but was part of the greater bear market since the peak of $15.38 in 2005. Our graphic shows the benchmark natural gas future settling into a bear's den at $2-$4. An exceptionally cold North American winter in 2014 eked out a $6 handle and, coupled with a spike to $5 in 2018, established a distinct trend in natural gas: price spurts just attract more sellers.

Settling Into A Bears Den - Natural Gas

Despite a colder-than-normal winter and bitter freeze that crippled Texas, the 2021 price surge stopped at $3.32, vs. the 2020 high of $3.40.

Technology Is Making Crude Oil, Gold Redundant. Innovation is accelerating the headwinds for crude oil and gold prices. The primary energy source and historical store of value are being replaced as humanity advances. Our graphic depicts the gold-to-crude oil price ratio returning to its longer-term support zone, and the declining significance of U.S. liquid fuel consumption vs. GDP. This is the trend in advanced economies, and many emerging markets are leapfrogging others by focusing on clean energy and decarbonization technologies.

Fossil Fuels Becoming Dinosaurs vs. GDP

Part of that mix is digitalization. Bitcoin is well on its way to becoming a global digital reserve asset vs. stable coins tracking the dollar, which are increasing the dominance of the greenback, as evidenced by trading volume that has about doubled the benchmark crypto's.

Is the Carbon Emissions Bull Gaining Legs? European emissions-allowance futures appear similar to 2H17, when they breached previous highs and embarked on an enduring rally. At a record high around 42.7 euros a ton on March 12, and 50% above their 50-week moving average, prices may be a bit extended, but that's what bull markets are supposed to do. Key resistance and the previous peak around 30 euros has likely transitioned to follow-up support. Pullbacks near this level are becoming less likely and, if they happen, are more likely to find a responsive audience.

Riding the Bull: European Carbon Emissions

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April 2021 Edition Bloomberg Commodity Outlook 2021

Our graphic depicts cleansing in March to the halfway mark of the 2016-19 rally. That plunge came amid the narrowest 50-week Bollinger Bands in about a decade, indicating a trend-ready market. Upside potential is harder to gauge, as we see emissions futures as more about managing the rising trajectory.

Front Energy Futures

Index Performance (as of March 31)

Individual Commodities Front Future Change

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April 2021 Edition Bloomberg Commodity Outlook 2021

Metals All (Index weight: 40% of BCOM) Performance: March -2.4%, 2021 -1.6%

Industrial (Index weight: 19.0% of BCOM. Performance: March -2.4%, 2021 +7.5%, Spot +7.8%

Precious (Index weight: 16.1% of BCOM. Performance: March -2.4%, 2021 -9.3%, Spot -8.9%

Innovation Is a Metals Tailwind Copper $9,000 Resistance vs. $1,700 Gold Support; Metals Winning. The base metals rally appears as extended as the precious metals' decline at the end of 1Q, but we see underpinnings for the broad sector improving vs. most commodities. Rapidly advancing technology is replacing fossil fuels, boosting agriculture yields and increasing demand for metals, which have an easy-to-store advantage for investors. Copper may be a bit too hot, having reached its highest price in a decade in 1Q, but the red metal has greater upside underpinnings than crude oil. Gold is dipping into layers of support but is naked -- if not paired -- with Bitcoin, as we see it.

Broad Metals Innovation Tailwinds

Bullish Innovation? Metals Outperformance Set to Accelerate. Commodities are in the midst of the acceleration stage of the gradually-then-suddenly mantra of innovation, in our view, which favors more of the same: metals-sector outperformance. There's little chance of a supercycle in fossil fuels, but we see plenty of potential in broad metals, with Bitcoin part of the gold allocation.

Innovation Favors Metals vs. Energy. Metals rising about 300% vs. energy declining almost 90% since the start of the new millennium is a performance disparity that looks set for more of the same in the next two decades, in our view. The accelerating pace of innovation suggests similar in sector-performance differences. Our graphic depicts a key headwind for the Bloomberg Energy Subindex Total Return and tailwind for metals: the concave shape of expected electric-vehicle sales. Trends toward electrification and decarbonization, which were suppressed by the previous U.S. administration, are gaining support under a Joe Biden presidency.

Rapidly Advancing Technology Favors Metals

Some reversion may occur, but we expect dips in metal prices to find responsive buyers vs. sellers in energy. That was the bias before the pandemic and nothing's changed our mind so far.

Copper vs. Gold in 2021; Advantage Red Metal. Some opposite performance from 2020 makes sense in 2021, but it's about endurance and we see base metals coming out ahead. The roughly 9% Bloomberg Gold Subindex Total Return this year has a strong headwind -- Bitcoin. Digital gold is rapidly replacing the old guard, notably in investment portfolios, and unless something unexpected trips up the rising tide of funds heading toward Bitcoin, we see limited upside for gold. The precious metal has dipped into a good support zone around $1,700 an ounce near the end of 1Q, but it may have lost a primary support -- exchange-traded-fund inflows.

Copper Outperformance vs. Gold Gaining Legs

Copper has elevated top-of-the range reversion risks having reached the highest futures closing price in a decade at $9,428 a ton in 1Q, but we expect the metal to find responsive buyers on dips back toward $8,000 support.

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April 2021 Edition Bloomberg Commodity Outlook 2021

Industrial Metals - Crude Oil Headwinds

New vs. Old Economy: Copper, Industrial Metals' Edge Widening. A primary headwind for the price of base metals is the over-supplied macroeconomic partner crude oil, but the metals are poised to continue outperforming, in our view. Spot metal prices and index total returns are gaining supports vs. most other commodities, notably on the back of decarbonization, electrification and ESG trends.

Industrial Metals Bull vs. Energy Bear. With a 20-quarter correlation at almost 0.80, industrial metals are closely linked to crude oil, but we see performance decoupling in favor of the metals. Fossil fuels are being replaced by technology, which means increasing demand for metals. Our graphic depicts the highest quarter-end close for the Bloomberg Industrial Metals Spot Subindex in about a decade. Juxtaposed in 1Q, Brent crude is declining from downtrend resistance on the back of the same old story: plenty of supply vs. slack demand.

Base Metals Set to Continue Beating Energy

Acceleration of favorable trends for metals vs. the opposite for energy is the greater risk, as we see it. In the unlikely scenario that Brent can sustain above good resistance at around $80 a barrel, base metals are still set to outperform. Crude's reversion toward the mean closer to $50 appears more likely.

Copper Gaining Tailwinds vs. Crude Oil. Easy to store and in-demand in a world increasingly focused on clean energy, the industrial metals' upper hand vs. energy is gaining momentum. Our graphic depicts the rising trajectory of copper vs. West Texas Intermediate crude-oil price ratio, which appears subdued vs. the rapidly appreciating relationship of the Bloomberg Industrial Metals Subindex Total Return vs. the same measure for energy. This is the bottom line for investors and a primary reason our bias for a potential commodity supercycle is focused on the metals. They're much easier to store, and thus rolling futures is typically less of a drag on returns.

Industrial Metals Outweighing Energy

We see risks tilted toward more of the same favoring metal prices and investor returns vs. energy.

Technical Outlook - Is Gold Too Cold?

Old-Guard Gold Appears Ready for Nap Time vs. Young Bitcoin. A bit too cold in March, gold is more likely to recover, but we see the metal settling into an extended rest period. Upside is limited by good resistance and relative new-comer Bitcoin. Below $1,700 an ounce should find layers of support and improving relative values, on the back of the about 20% discount from the peak.

Is Bitcoin Making Gold Too Cold? Gold's steepest discount to its upward sloping 50-week moving average since the 2018 bottom should provide buoyancy at least in the near term, in our view. The metal's upward trajectory, which resumed with the first Federal Reserve rate hike in 2015, is being threatened by new-comer Bitcoin, but having corrected about 20% from its 2020 peak and backing into layers of support, probabilities are tilted toward a gold-price recovery. Our graphic depicts the metal getting overextended to the downside, approaching 10% below its annual mean. The bottom band at about $1,650 an ounce is good support and the 50-week moving average around $1,830 is initial target resistance.

Gold Backing Into Layers of Support

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April 2021 Edition Bloomberg Commodity Outlook 2021

The gold bull market has clearly stalled, and we believe it's transitioning toward a long-slog, range-bound market.

Per-Ounce $1,600-$1,900 Set to Cage Gold in 2021. Gold appears to have limited downside and upside potential, and is more likely to settle into a cage marked by $1,600-$1,900 an ounce, in our view. Something significant may be required to sustain it above the old highs and good resistance since October at about $1,900. Unless the higher price-discovery process in Bitcoin reverses, the crypto represents a top gold headwind. Our graphic depicts the metal at a favorable relative value condition vs. its upward sloping 20-month moving average.

Gold Backing Into Uptrend Support

We see gold closer to the lower end of its likely range, potentially for an extended period, with a price of about $1,720 on March 10. Following the 2011 peak, the metal didn't breach $1,600 support until 2013. The gold bull appears set for dormancy, but a bear market is unlikely, in our view.

Technical Outlook - Vulnerable Copper

Copper, Crude-Oil Potential Peaks and Elevated Ebbing Tide Risks. Does copper have enough momentum to sustain new highs? It's a key question, and our bias is tilted toward greater risks of reversion. Advancing macroeconomic companions -- bond yields, equity and crude-oil prices -- are historically copper-bull prerequisites, which elevates subjectivity to some ebbing of the tide.

Is Copper Running Just Too Hot? Approaching its all-time high at about $10,000 a ton in February, we see copper at greater risk to back-and-fill. Our graphic depicts the last time the metal was similarly stretched above its 20-month moving average, in 2010, when it backed up about 25% from roughly $8,000. This is a good level to look for some reversion and to build a base of support. Sharp spikes in copper to new highs, and above the Feb. 25 close of $9,428, have proven futile since 2006. Recent record highs in commercial shorts, and our graphic showing the Wilshire 5000 Total Market

Index at its highest ever vs. GDP, are headwinds for copper pricing.

Elevated Reversion Risks - Upper End of Range

When copper breached $8,000 resistance in 2010 on the way to new highs, the stock market was about 1-to-1 vs. GDP. It's closer to 2x now. Copper is about 0.70 correlated to the Wilshire on a 20-month basis.

Copper Headwinds Increasing If Peaking Oil. Typical copper bull-market companions represent headwinds more likely to prevent the metal from sustaining new highs, in our view. Macroeconomic commodity brethren crude oil is a key copper-price resistance factor historically. Our graphic depicts WTI crude potentially peaking from the 2020 price plunge. If oversupplied oil continues to decline, copper will have trouble advancing, but the rapid pace of decarbonization and electrification should be reducing the high correlation between the commodities.

Unfavorable Copper Mean-Reversion Risks

At about $4.15 a pound to March 23, the average annual price of the CME copper future in 2021 is the highest ever. We see this as indicative of a bull market, but copper mean reversion is the greater risk in the near term, particularly if recovering crude oil, bond yields and the stock market pull back a bit.

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April 2021 Edition Bloomberg Commodity Outlook 2021

Technical Outlook - Aluminum Reversion Risk

Worst Performing Major Metal, Aluminum Risks More of the Same. Aluminum appears a bit too exuberant nearing the upper end of its multiyear range and absent a meaningful correction since the 2020 low, in our view. A laggard in the Bloomberg Industrial Metals Index, aluminum is poised for more of the same, notably from relatively elevated levels approaching mid-March.

Is Caged Aluminum Running a Bit Too Hot? Getting out over its skis and at a high risk of retracement is our take on the aluminum price in March. Absent a drawdown of more than 6% since the April low, the metal appears vulnerable approaching the upper end of its range since 2012. Our graphic depicts aluminum the most extended above its 20-month moving average since the 2018 peak. Among the worst-performing major metals on a two-year basis, aluminum appears particularly at risk if the Bloomberg Industrial Metals index reverts a bit from 10-year highs reached at the start of 2021.

Upper End of Multiyear Range – Aluminum

The 2018 high monthly close at about $2,300 a ton may act as a price cap, with increasing potential for some retracement toward initial support around $2,000. The steep premium to the 20-month mean of about $1,800 vs. the price around $2,170 on March 10 warrants caution.

Aluminum Likely Stuck in the Same Old Range. Unchanged since 2005 and approaching the upper end of its range since 2012, we see the aluminum price recovery from the 2020 bottom running into layers of resistance. In an upswing, as indicated by the five-year moving average, the metal appears more likely to settle into more of the same range-trading. Our graphic depicts the 2018 peak at $2,700 a ton and 2020 low of $1,420 as likely levels to keep aluminum bracketed, potentially for years. Both levels are extremes that were readily rejected. More of the same since 2012 is our outlook for aluminum, which appears a bit too exuberant in March as it nears the highest year-end close in a decade, roughly $2,260 in 2017.

Bumping Into Layers of Resistance – Aluminum

One of the poorest performers in the Bloomberg Industrial Metals Index, we see risks tilted toward more of the same for aluminum vs. the potential for catch-up.

Technical Outlook - Palladium vs. Platinum

Top-Performing Commodity Palladium Is Losing Luster to Platinum. Up about 300% on a five-year basis, palladium remains a top-performing major commodity, but it may be more of a tiring rabbit for platinum. Palladium's small market size and easy substitution by platinum should instill bull-market caution for the metal that's famous for getting relatively overbought and sharp retracements.

Palladium Risk More Elevated Than Platinum's? Price history portends a high risk of continued retracement and the potential for palladium to pass the performance baton to platinum. The 2001 palladium peak around $1,125 an ounce is the most recent example of the ratio of the brethren metals reverting from a record high. Well off its all-time high at about 3.3x a year ago, the palladium-to-platinum ratio at about 1.95x on March 9 remains above the peak from about 20 years ago that preceded a 90% decline in palladium. As innovation is unlikely to disappear, shifting demand for chemical catalysts toward the cheaper metal should stiffen the palladium headwind.

History Not Favorable for Lofty Palladium

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April 2021 Edition Bloomberg Commodity Outlook 2021

Our graphic depicts the unfavorable history for palladium when it stretches more than 80% above its five-year moving average, particularly when peaking from a high plateau vs. platinum.

Palladium Bull Losing Momentum Since 2020 Peak. As upward momentum wanes, we find palladium at greater risk of reverting toward the steeply discounted platinum price. In the past 25 years, when palladium stretched above its 60-month mean as much as it did in 2020, the metal transitioned to a bear market. The 1998 peak to about $425 an ounce was the most recent example that didn't decline precipitously, but a loss of about 90% to 2003's low from the 2001 apex pushed prices far below that 1998 high. Palladium momentum has downshifted since its 2020 zenith vs. the opposite in platinum.

Palladium May Be Losing Battle vs. Platinum

Increasingly interchangeable for industrial uses and subject to some innovation catch-up for steeply discounted platinum, reversion to a lower mean in palladium below $2,000 an ounce appears to be a likely course, indicated by platinum around $1,200 on March 9.

Individual Commodities Open Interest

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April 2021 Edition Bloomberg Commodity Outlook 2021

Agriculture (Index weight: 35% of BCOM) Performance: March -1.8%, 2021 +6.8, Spot +6.3%

Grains (Index Weight: 24% of BCOM) Performance: March -0.1%, 2021 +8.3%, Spot +8.3% Softs (Weight: 6% of BCOM) Performance: March -1.5%, 2021 -9.9%, Spot -2.4%

Bullish Supply Elasticity New vs. Old Economy: Agriculture Price Downside vs. Innovation. The agriculture rally appears as extended as crude oil in 1Q, with increasing elasticity of supply a primary price headwind. Rapidly advancing technology is replacing fossil fuels, boosting agriculture yields and increasing demand for metals, which have an easy-to-store advantage for investors, notably vs. agriculture. Agriculture's Issues: Supply Ahead and Crude Oil. Agriculture prices face increasing pressure from the potential for an enduring crude oil bear market and increasing elasticity of supply. Our graphic depicts the world's most significant commodity -- crude -- backing away from the downtrend since the financial crisis. Juxtaposed is the Bloomberg Grains Spot Subindex reaching its highest level in seven years in 1Q. We expect fence post-to-fence post planting in the Corn Belt, and unless yields are pressured by bad weather, the narrative in 4Q is tilted toward a supply glut.

Grain, Agriculture Prices Meet Good Resistance

U.S. traded corn and soybeans make up the majority of the Bloomberg Agriculture Index due to trading volume and global significance. We expect the world's largest grain exporter to respond to the incentive of higher prices, which will result in lower as 2021 matures.

Following the Money Means Plenty of Grain Supply. U.S. planted acres of corn and soybeans are set to leap in 2021, and unless weather is unfavorable, 4Q issues will center on how to distribute the largest crop in history. Our graphic depicts a strong incentive for USDA corn and soybean prospective planting acres to hit a new record: the highest prices for corn futures in eight years. Farmers have survived on the back of rising yields, improving technology and cost cutting. The potential for net profit and the greatest revenue in almost a decade point to the basics of capitalism and economics, and plenty more supply in 2021.

Economic Rules Point to Plenty of Supply

This year will be a good test of the U.S. grain-production machine and we expect it to pass. Lean years have likely stepped up the acceleration stage of the gradually-then-suddenly mantra of innovation, boosting yields.

Oil Turns Up Heat on Agriculture Prices. Soybean harvest in Brazil is almost complete and it's been another record year, which we believe should keep a lid on prices. Assuming grain demand and imports from China remains strong, 2021 Corn Belt production is the primary factor in agriculture prices and, if we just follow the trends, there should be massive supply and thus price pressure. Soybean oil and crude at the top of our 2021 scorecard near the end of 1Q makes sense, but crude represents more of a price-pressure risk for the ags than support. The world's most significant commodity is rapidly being replaced by technology, while similar innovation increases grain yields.

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April 2021 Edition Bloomberg Commodity Outlook 2021

Little Hope for Higher Ags If Crude Oil Declines

If crude simply keeps doing what it's been doing since the 2008, 2014 and 2018 peaks -- declining -- there's little hope for agriculture prices, which reached the highest in seven years in 1Q.

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Composite Indices * Click hyperlinks to open in Bloomberg

Mar YTD 1-Year 3-Year 5-Year 10-Year 20-Year 30-Year 40-Year 50-YearBloomberg Commodity ER BCOM -2.15% 6.91% 34.90% -4.61% 5.86% -50.79% -20.81% -13.19% -32.07% 350.52%Bloomberg Commodity TR BCOMTR -2.15% 6.92% 35.04% -0.60% 12.07% -47.72% 3.49% 82.69% 232.85% 4454.36%

Bloomberg Commodity Spot BCOMSP -2.09% 7.59% 54.65% 18.54% 51.91% -13.28% 249.48% 359.64% 261.68% 1997.89%Bloomberg Roll Select BCOMRST -1.81% 6.64% 34.32% 1.47% 18.41% -39.49% 134.04% 380.63%

1 Month Forward BCOMF1T -1.80% 7.30% 37.90% 4.19% 19.66% -40.07% 79.04% 279.78% 2 Month Forward BCOMF2T -1.65% 7.31% 38.36% 8.54% 26.51% -37.79% 124.94% 359.39% 3 Month Forward BCOMF3T -1.80% 6.75% 37.59% 7.81% 26.13% -35.82% 144.96% 376.85% 4 Month Forward BCOMF4T -1.51% 7.05% 39.20% 9.61% 31.55% -30.28% 191.24% 5 Month Forward BCOMF5T -1.39% 7.11% 38.79% 11.85% 34.52% -28.62% 202.15% 6 Month Forward BCOMF6T -1.31% 6.67% 36.87% 10.90% 33.86% -28.35% 211.59%

Energy BCOMENTR -3.60% 17.32% 37.44% -35.56% -19.55% -79.73% -83.89% -44.03%Petroleum BCOMPETR -2.48% 22.82% 83.78% -24.33% 7.89% -66.53% -21.34% 125.84%Agriculture BCOMAGTR -1.78% 6.81% 38.02% 9.45% 1.81% -41.74% 12.63% 5.59% 32.03% 1459.46%

Grains BCOMGRTR -0.08% 8.25% 39.20% 12.71% 0.64% -38.87% 3.29% -22.47% -19.09% 436.70%Industrial Metals BCOMINTR -2.43% 7.49% 53.35% 14.87% 63.33% -25.20% 170.44% 221.51%Precious Metals BCOMPRTR -2.44% -9.26% 15.25% 27.95% 34.12% -7.36% 453.88% 391.03% 167.77%

All Metals BCOMAMT -2.44% -1.61% 32.06% 20.75% 49.33% -15.54% 310.31%Softs BCOMSOTR -9.93% -1.49% 21.91% -8.59% -20.00% -67.19% -42.16% -32.47% 9.31% 2686.00%

Livestock BCOMLITR 5.35% 10.44% 17.69% -13.13% -22.45% -39.75% -62.84% -56.26%Ex-Energy BCOMXETR -1.46% 3.11% 34.12% 13.65% 21.78% -28.46% 90.82% 110.02%

Ex-Petroleum BCOMXPET -2.05% 3.10% 26.73% 2.82% 7.70% -45.99%Ex-Natural Gas BCOMXNGT -1.72% 7.22% 42.33% 7.33% 23.92% -35.18%Ex-Agriculture BCOMXAGT -2.30% 6.90% 34.09% -5.32% 15.34% -51.51%

Ex-Grains BCOMXGRT -2.53% 6.57% 34.28% -3.43% 13.98% -50.38%Ex-Industrial Metals BCOMXIMT -2.10% 6.82% 31.28% -3.92% 2.74% -52.04%Ex-Precious Metals BCOMXPMT -2.09% 10.81% 39.33% -6.43% 6.75% -54.28%

Ex-Softs BCOMXSOT -1.52% 7.59% 36.13% -0.06% 14.57% -46.25%Ex-Livestock BCOMXLIT -2.62% 6.61% 35.98% 0.00% 14.14% -48.37%

Ex-Agriculture & Livestock BCOMXALT -3.02% 6.47% 35.57% -4.85% 18.73% -52.76%Bloomberg Dollar Spot BBDXY 1.48% 2.85% -7.60% 2.36% -2.55% 21.45%

Bloomberg US Large Cap TR B500T 3.81% 5.52% 58.49% 62.76% 118.29% 276.29%US Aggregate LBUSTRUU -1.25% -3.37% 0.71% 14.62% 16.51% 40.25% 141.03% 419.50% 1719.39%US Treasury LUATTRUU -1.54% -4.25% -4.43% 12.78% 11.63% 33.16% 120.06% 372.60% 1444.33%

US Corporate LUACTRUU -1.72% -4.65% 8.73% 19.78% 27.07% 63.50% 198.54% 570.25% 2430.86%US High Yield LF98TRUU 0.15% 0.85% 23.72% 21.97% 47.32% 87.41% 328.71% 988.66%

Single Commodity Indices

Mar YTD 1-Year 3-Year 5-Year 10-Year 20-Year 30-Year 40-Year 50-YearNatural Gas BCOMNGTR -7.17% 3.03% -17.55% -59.76% -66.37% -95.63% -99.87% -99.70%

Low Sulfer Gas Oil BCOMGOT -4.78% 19.14% 41.58% -26.73% 16.92% -61.46% 63.30% 212.89%WTI Crude BCOMCLTR -3.38% 22.51% 80.41% -40.66% -17.88% -80.16% -58.98% 33.91%

Brent Crude BCOMCOT -1.35% 23.27% 92.91% -7.63% 39.99% -56.68% 96.43% 582.22%ULS Diesel BCOMHOTR -3.55% 20.05% 48.40% -21.89% 18.78% -59.73% 15.13% 103.82%

Unleaded Gasoline BCOMRBTR 0.93% 28.96% 179.38% -8.43% 14.53% -39.39% 71.30% 434.16%Corn BCOMCNTR 3.06% 16.93% 51.68% 9.86% -2.04% -48.68% -61.73% -80.27% -79.48% -30.19%

Soybeans BCOMSYTR 2.32% 9.73% 58.02% 18.01% 27.97% 24.59% 457.88% 436.34% 414.70% 4132.98%Wheat BCOMWHTR -6.40% -4.21% 3.48% 15.87% -20.46% -68.16% -77.20% -85.98% -85.93% -32.41%

Soybean Oil BCOMBOTR 5.97% 26.71% 90.86% 48.91% 28.53% -38.05% 66.47% 13.54% 40.22% 1843.25%Soybean Meal BCOMSMT 0.43% -1.24% 25.90% -3.23% 29.93% 79.46% 1115.60% 1602.71%HRW Wheat BCOMKWT -9.15% -5.39% 7.64% -10.99% -39.50% -77.98% -66.69% -52.38%

Copper BCOMHGTR -2.37% 13.53% 75.75% 29.33% 73.04% -17.26% 447.99% 731.58%Alumnium BCOMALTR 2.25% 10.61% 38.13% 4.43% 32.43% -44.45% -18.45% -25.85%

Zinc BCOMZSTR 0.75% 1.83% 44.19% -5.35% 70.56% 9.76% 101.04% 95.15%Nickel BCOMNITR -13.60% -3.52% 37.86% 19.71% 82.72% -44.73% 269.86% 193.68%Gold BCOMGCTR -0.92% -9.81% 4.37% 23.96% 30.55% 9.31% 468.71% 341.63% 200.91%Silver BCOMSITR -7.21% -7.23% 67.59% 42.62% 45.62% -43.58% 354.86% 414.28% 45.82%Sugar BCOMSBTR -10.21% -0.16% 38.09% 1.31% -24.75% -65.65% -18.96% 65.64% -73.96% 54.09%Coffee BCOMKCTR -10.18% -5.27% -5.37% -23.47% -40.76% -81.71% -81.02% -84.01% -64.23%Cotton BCOMCTTR -8.95% 1.92% 52.27% -5.25% 32.01% -47.96% -49.30% -54.27% 95.26% 1302.16%

Live Cattle BCOMLCTR 2.40% 2.27% 8.46% -2.74% -9.77% -22.31% -20.38% 14.26% 633.19% 2475.14%Lean Hogs BCOMLHTR 10.42% 27.49% 38.04% -29.64% -41.63% -62.56% -89.60% -92.71%

Index Name Ticker

Index Name Ticker

PERFORMANCE: Bloomberg Commodity Indices

2021

2021

15

Composite Roll Select Indices * Click hyperlinks to open in Bloomberg

Mar YTD 1-Year 3-Year 5-Year 10-Year 20-Year 30-Year 40-Year 50-YearBCOM Roll Select BCOMRST -1.81% 6.64% 34.32% 1.47% 18.41% -39.49% 134.04% 380.63%

Roll Select Agriculture BCOMRAGT -1.74% 6.73% 35.57% 7.23% 3.57% -38.39% 92.81% 110.42%Roll Select Ex-Ags & Livestock BBURXALT -2.44% 6.10% 34.70% -0.78% 28.93% -42.10% 147.38%

Roll Select Grains BCOMRGRT -0.77% 6.99% 35.77% 9.30% 2.32% -37.46% 83.82% 52.57%Roll Select Softs BCOMRSOT -8.52% 0.38% 21.06% -12.11% -21.97% -64.52% -3.51% 31.24%

Roll Select Livestock BCOMRLIT 5.16% 11.30% 23.53% -11.69% -27.30% -38.52% 17.30% 94.11%Roll Select Energy BCOMRENT -2.48% 16.51% 35.15% -24.15% 1.88% -66.92% -14.59% 311.52%

Roll Select Ex-Energy BCOMRXET -1.47% 2.97% 33.61% 11.99% 21.79% -26.23% 210.50% 292.05%Roll Select Petroleum BCOMRPET -1.15% 21.11% 68.41% -10.37% 33.77% -50.23% 209.81% 947.97%

Roll Select Industrial Metals BCOMRINT -2.34% 7.51% 52.64% 11.48% 60.79% -24.05% 283.25% 415.29%Roll Select Precious Metals BCOMRPRT -2.46% -9.42% 16.27% 28.89% 35.64% -5.91% 474.46% 408.99%

Single Commodity Roll Select Indices

Mar YTD 1-Year 3-Year 5-Year 10-Year 20-Year 30-Year 40-Year 50-YearNatural Gas RS BCOMRNGT -6.35% 4.61% -9.50% -54.34% -55.68% -90.32% -97.86% -83.53%

Low Sulfer Gas Oil RS BCOMRGOT -2.71% 21.00% 38.59% -23.88% 16.03% -58.63% 98.39% 325.11%WTI Crude RS BCOMRCLT -0.97% 20.87% 72.72% -3.91% 40.26% -51.71% 237.75% 1283.71%

Brent Crude RS BCOMRCOT -1.16% 20.38% 72.02% -9.12% 40.24% -49.93% 233.20% 1243.82%ULS Diesel RS BCOMRHOT -3.55% 19.11% 39.44% -28.48% 5.40% -63.39% 99.43% 385.02%

Unleaded Gasoline RS BCOMRRBT 2.63% 26.70% 122.60% 9.14% 60.86% -15.57% 304.96% 949.39%Corn RS BCOMRCNT 1.33% 12.88% 40.99% 3.58% -3.28% -50.51% -35.57% -59.97%

Soybeans RS BCOMRSYT 1.97% 9.37% 60.14% 23.29% 44.96% 48.14% 729.77% 617.84%Wheat RS BCOMRWHT -5.27% -1.98% 3.25% 6.35% -27.70% -71.23% -34.41% -34.52%

Soybean Oil RS BCOMRBOT 5.95% 25.81% 85.75% 43.88% 25.66% -35.18% 127.67% 101.29%Soybean Meal RS BCOMRSMT 1.46% 0.46% 24.78% 3.62% 42.52% 107.98% 1672.37% 2175.31%HRW Wheat RS BCOMRKWT -8.78% -4.52% 7.75% -15.02% -40.00% -77.01% -29.88% 10.04%

Copper RS BCOMRHGT -2.28% 13.22% 75.09% 26.73% 72.64% -17.36% 646.86% 1209.37%Alumnium RS BCOMRALT 2.24% 11.03% 36.08% -1.98% 26.07% -43.03% 13.79% 18.40%

Zinc RS BCOMRZST 0.91% 2.01% 44.67% -8.76% 67.46% 10.32% 198.28% 212.92%Nickel RS BCOMRNIT -13.51% -3.59% 37.66% 19.46% 82.44% -42.67% 483.76% 437.97%Gold RS BCOMRGCT -0.95% -9.87% 5.73% 25.50% 32.77% 11.28% 481.52% 348.75%Silver RS BCOMRSIT -7.23% -7.74% 66.72% 41.26% 44.76% -43.03% 391.78% 466.02%Sugar RS BCOMRSBT -7.46% 3.71% 34.33% -8.89% -31.56% -64.71% 53.55% 204.82%Coffee RS BCOMRKCT -9.65% -5.10% -4.38% -23.79% -40.66% -80.84% -71.09% -67.78%Cotton RS BCOMRCTT -8.40% 3.80% 55.71% 0.34% 40.23% -36.09% -18.87% -17.33%

Live Cattle RS BCOMRLCT 3.78% 7.16% 17.23% -3.09% -11.85% -24.64% 43.27% 136.40%Lean Hogs RS BCOMRLHT 7.94% 19.56% 40.36% -23.69% -45.74% -56.52% -27.60% 2.86%

PERFORMANCE: Bloomberg Commodity Roll Select Indices

Index Name Ticker

Index Name Ticker

2021

2021

16

BCOM Constituent Weights BCOM Index MEMB <GO> * Click hyperlinks to open in Bloomberg

Group Commodity Ticker Mar 2021 Contrib to Return %

Mar 31 2021 Weight %

Feb 26 2021 Weight %

Mar 2021 Weight% Change

2021 Target Weight

Natural Gas NG (0.55) 7.48 7.89 (0.41) 8.07%Low Sulfer Gas Oil QS (0.14) 2.90 2.98 (0.08) 2.64%

WTI Crude CL (0.31) 9.06 9.18 (0.12) 8.14% Brent Crude CO (0.09) 7.51 7.60 (0.09) 6.86% ULS Diesel HO (0.08) 2.29 2.32 (0.03) 2.08% Gasoline XB 0.02 2.75 2.67 0.08 2.18%Subtotal (1.16) 31.99 32.64 (0.65) 29.97%

Corn C 0.18 6.10 5.80 0.31 5.59% Soybeans S 0.13 5.90 5.64 0.25 5.82%

Wheat W (0.18) 2.65 2.78 (0.12) 2.89% Soybean Oil BO 0.20 3.69 3.41 0.28 3.20%

Soybean Meal SM 0.02 3.37 3.29 0.08 3.60% HRW Wheat KW (0.14) 1.45 1.56 (0.11) 1.57%

Subtotal 0.21 23.16 22.47 0.69 22.65% Copper HG (0.14) 5.58 5.59 (0.02) 5.39%

Aluminum LA 0.09 4.36 4.17 0.18 4.21% Zinc LX 0.02 3.03 2.94 0.09 3.25%

Nickel LN (0.35) 2.30 2.61 (0.31) 2.71%Subtotal (0.38) 15.26 15.31 (0.05) 15.56%

Gold GC (0.12) 12.56 12.39 0.17 14.65% Silver SI (0.29) 3.75 3.95 (0.21) 4.35%

Subtotal (0.40) 16.30 16.34 (0.04) 19.00% Sugar SB (0.30) 2.70 2.95 (0.24) 2.99% Coffee KC (0.30) 2.67 2.91 (0.24) 2.74% Cotton CT (0.14) 1.47 1.58 (0.11) 1.51%

Subtotal (0.74) 6.84 7.43 (0.60) 7.23% Live Cattle LC 0.09 3.93 3.76 0.17 3.85% Lean Hogs LH 0.23 2.51 2.04 0.48 1.73%Subtotal 0.32 6.45 5.80 0.65 5.57%

Total (2.15) 100.00 100.00 100.00%

Energy

Livestock

Softs

Precious Metals

Industrial Metals

Grains

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