Market Fundamentals should be considered as one of the pillars for helping one understand the intrinsic value of a given commodity. This being with the premise to gauge if something is perhaps undervalued or overvalued. At its simplest level it is understanding the basics of supply and demand but within that understanding centres a far more complex subject. Split into two main variables which come under Quantitative and Qualitative fundamentals. 

Quantitative fundamental analysis factors are very much data driven, data releases and reports for commodity markets. These reports are centered around the supply and demand estimates, position of traders and unfixed sales within the market. Examples include:

–        WASDE (World Agricultural Supply and Demand Estimates)

–        CFTC COT (Commitments of Traders)

–        CFTC Cotton on call report (unfixed sales) 

Qualitative measures are typically harder to understand than quantitative measures as they need to be interpreted and are somewhat subjective. This could include weather, trade deals or wars, legislation and its impacts on supply and demand of commodities. Again, going back to the core goal of fundamentals being the S&D’s!

Unravelling the story is essentially what you are trying to achieve. Below are some of the starting points to consider as subdivisions within this pillar, or framework for understanding the fundamentals. 

Factors to consider: