The forecast is now for an important low in commodity prices later in 2016. This should be the low point of the decade, or one of a series of lows. In other words, do not expect further collapse in commodity prices after this low in place.

The Commodities Price Model then forecasts consolidation and perhaps sideways prices into 2018 with a sharp rally into the end of the decade.

One variation I would be on the look out for compared to Figure 8 above is that rallies in prices during 2016-18 and certainly in 2019 may be greater than delineated by the model. This is an important aspect of forecasting, which is to interpret the forecasts within the context of the times – in other words, within the context of an upswing of the Long Wave, where the overall bias for commodity prices is to the upside.

I draw the following conclusions from the analysis presented above:

1. The low point in the decade should be close at hand. Do not expect commodity prices to collapse from here, even though any lows in 2018, should they materialize, may marginally break the lows in 2016.

2. Equally, do not expect a runaway advance in prices just yet – the Price Model is forecasting more of a sideways move from here for a couple of years. This is consistent with market events in which weaker demand is balanced against abundant supply.

3. The price behavior of individual commodities may vary from this overall pattern. Remember, this forecast is made for average prices. This means that one commodity may have a strong year and another one a weak one and the overall average would be sideways.

4. That being said, oil is the most important commodity and most heavily weighted within price indices. Should oil start to move up sharply (which I am not expecting) this will be seen in the index.

5. Remember the overall context for commodities – the upswing of the Kondratieff Long Wave. The overall bias for prices is towards the upside. Fluctuations in prices, particularly on the upside may now be greater than indicated in the Price Model.”