It’s hard not to look at the gains commodities have made over the past year and utter a sigh of relief.

After a disastrous 2014 and 2015, commodity indexes notched respectable increases this year. As of Oct. 21, the broad-based S&P GSCI Total Return Index was up 7.77% year-to-date. The Bloomberg Commodity Index, meanwhile, rose 9.61%.

Don’t be fooled, however. 2016 wasn’t a rally so much as a rebound—and a modest one at that. Broad-market indexes remain double-digit percentages below the levels struck in the heyday of the commodity boom, when it seemed like nothing could stop the surge in prices.

“It’s really been one of the most remarkable periods of underperformance,” said Rob Lutts, president and chief investment officer of Salem, Massachusetts-based Cabot Wealth Management. “Name the commodity—oil, copper, sugar, corn—it’s been a bear market all over the place.”

We believe commodity markets still face significant head winds in 2017, including:

1) Lower Chinese Demand
Demand from emerging markets, especially China, stoked the fire under the late-2000s commodities boom. But Chinese appetite for raw materials has eased, as the country shifts from a manufacturing economy to a service-driven one. That deceleration in demand from the world’s second-largest economy will likely continue to limit commodity prices.  

2) Broad Oversupply
From corn to copper, many commodities now stagger under significant supply gluts. China has made a concerted effort to stockpile base metals, for example, while U.S. farmers are reaping record corn and soybeans harvests, on top of massive existing supplies.

Then, of course, there’s oil. Significant stockpiles have amassed, fed by U.S. shale oil and other low-cost production sources. That’s pushed prices down from more than $100 a barrel in 2014 to roughly $50 today. 

Some producers have discussed throttling supply; in September, OPEC even cut its production for the first time in eight years. However, it’ll take time for such cutbacks to make a dent in supply—if they even can. 

3) Stronger Dollar  
Right now, the U.S. dollar is stronger than it’s been in more than a decade. As a result, commodities priced in dollars—as most are—become more expensive in other currencies, crimping demand. 

A strong dollar is especially bad news for gold, which has an inverse relationship with the greenback. (Whither gold goes, so do other precious metals, like silver and platinum.) That means, if the dollar remains mighty, gold’s future will likely be hamstrung.

That said, there’s still some hope for commodities, as producers slash output and table new projects. Plus, we’re just one bad-weather event away from erasing agricultural stockpiles entirely.

“Try to find someone who’s really bullish about commodities today. It’s not easy,” noted Lutts. “But everything goes through cycles. Will we ever see again a cycle as dramatic as the 2007-2008 boom? Probably not. But commodities may have intrinsic value now that’s higher than current prices.”

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