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Commodity prices continue to ebb and flow at the whim of movements in Chinese equity prices and concerns about a “hard landing” for the economy. Although agricultural prices don’t have the same level of correlation with the performance of the Chinese …
2nd September 2015
The price of gold is vulnerable to one last dip if, as we anticipate, the Fed presses ahead with a first hike in US interest rates soon. We have reflected this risk in our end-Q3 forecast of $1,050 per ounce (compared with a current price of $1,142). But …
1st September 2015
The relief rally in Chinese equities prompted by additional policy stimulus has turned global sentiment around, but a sustained recovery in commodity prices will probably require hard evidence that the Chinese economy is picking up again. Fortunately, …
28th August 2015
Chinese import demand has been a key factorshaping agricultural commodity prices over thepast decade or more. Recently the NationalDevelopment and Reform Commission (NDRC)and the Ministry of Agriculture have indicatedthat they will allow the market to …
Indonesia, the world’s top exporter of tin, has introduced new regulations on the production and shipping of the solder metal. On their own, the new controls are unlikely to boost prices, but they could be a contributory factor leading to a tighter market …
27th August 2015
US stocks of crude oil fell sharply last week, but stocks of gasoline rose, despite more US refiners being offline for maintenance. … US Weekly Petroleum Status …
26th August 2015
Investor sentiment towards commodities has rarely – if ever – been more negative. However, the recent sharp falls in prices can largely be seen as the continuation of trends in place since 2011. The main difference is that oil, previously an outlier, has …
Exchange stocks of copper remain high and have risen strongly since the start of 2015. However, stocks of other metals, notably tin and lead, are now at very low levels on a historical basis. This may be one factor supporting a rebound in prices later …
25th August 2015
The price of US lumber has continued to fall since early June. But with single family unit starts andindustry confidence strengthening, we think that the price of lumber will end the year higher. … The price of US lumber set for strong …
We think that OPEC will remain steadfast in its policy of maintaining high output, despite the renewed slump in oil prices and the potential return of exports from Iran. … OPEC to resist calls to cut …
Although the latest data show stronger output in the South African PGM sector in June, the risk of strike action has risen in the last month and the potential for further power disruption remains. We expect production growth to slow towards the end of the …
The negative sentiment prompted by the slide in the renminbi has been compounded by further weakness in Chinese equities and another soft reading of the country’s manufacturing PMI. What’s more, falling industrial commodity prices are feeding back into …
21st August 2015
The depreciation of the Chinese currency alongwith declining consumption and imports of coalhave raised the question of whether China,currently the world’s largest importer of coal, could soon switch positions to become a major exporter. In this Energy …
The price of gold has been undermined this year by the strength of the dollar and rising bond yields as the first hike in US interest rates approaches. Indeed, we continue to expect one more dip from current levels of around $1,155 per ounce as the Fed …
The weak manufacturing PMI reading from China may have been distorted bytemporary factors and the manufacturing sector has yet to feel the full benefit of policyeasing. Nonetheless, today's Chinese data will reinforce the negative sentimenttowards …
Sugar and soybean prices have followed similar paths in recent years. But while the fundamentals areturning in favour of sugar, the same factors point to further weakness for soybean prices. … Sugar prices likely to recover well before …
20th August 2015
According to the International Aluminium Institute, global aluminium productiongrew by nearly 11% y/y in July. But excluding China, output rose by just 1.3% y/y. … Global Aluminium Production …
US oil stocks rose last week as a number of US refineries performed maintenance. But demand for products remained high, meaning stocks of gasoline fell. … US Weekly Petroleum Status …
19th August 2015
After a generally positive mid-June to mid-July period, the prices of mostagricultural commodities have since gone into reverse, with many sufferingheavy falls. Indeed, six of the eleven commodities we cover have seen prices fallby 10% or more. … …
The recent slump in copper prices has more to do with investors’ fears about China’s future copperdemand, than with the reality of Chinese copper usage. As such, we would expect a sharp rebound inprices as these fears are allayed and demand picks up later …
We doubt that the rise in the number of active drilling rigs in the US over the last few weeks will continue for much longer, despite improvements in efficiency. A renewed decline should weigh on US oil production and in turn could offer some support to …
18th August 2015
The costs of rare earth elements (REEs) have continued to fall despite China’s new tax regime. However, we think that it is only a matter of time before higher taxes and positive demandfundamentals translate into a recovery in prices. … Why hasn’t China’s …
Subdued demand in the first half of this year meant that the lead and zinc markets were in surplus. However, with supply expected to tighten and demand to strengthen, prices should pick up from here. … Lead and zinc markets set to …
In the last month, China has added a further 19 tonnes to its official holdings of gold. This supports our view that China’s gold accumulation will continue and that official purchases will be one of several factors supporting the price of gold in the …
Commodity prices have continued their decline over the past month, with both the GSCI and Bloomberg commodity indices falling to levels last seen in mid-2009. As a result, the gulf between returns from commodities and other asset classes has widened. … No …
17th August 2015
The People’s Bank of China surprised markets on Tuesday by lowering the reference rate that determines the mid-point of the renminbi’s trading band against the US dollar. Although the bank explained the policy change as part of financial reform, markets …
14th August 2015
The sharp fall in aluminium prices this year could be expected to lead to output cuts across the industry. But with China’s production less sensitive to prices, output cuts are more likely elsewhere resulting in a greater market share for China’s …
In its latest World Demand Trends report, published today, the World Gold Council depicted a challenging time for gold in Q2. Demand was weak across all sectors but supply also fell, meaning that overall the market appeared broadly balanced. What’s more, …
13th August 2015
Higher estimates by the USDA for US corn and soybean production this year (2015/16) have seen crop prices plummet. But with ample world supplies and rising stocks, we think prices can fall further. … Boost to US harvests puts prices under more …
The S&P GSCI industrial metals index has now fallen by nearly 10% since the end of the second quarter. A deterioration in investor sentiment weighed on prices throughout most of July, while the devaluation of the renminbi has led to a further bout of …
US oil stocks have now fallen for the third consecutive week as demand remains very strong and oil production shows signs of falling back a little. … US Weekly Petroleum Status …
12th August 2015
All else equal, a weaker renminbi means that US dollar-denominated commodities will be more expensive in local currency terms for Chinese buyers. However, with the renminbi unlikely to go into freefall and with commodity prices currently very low, we …
Last month’s increase in supply from OPEC adds to the glut of oil already in the market and underlines the cartel’s commitment not to cut output just to support prices in the short term. … OPEC keeps the pumps on full …
11th August 2015
Continued weakness in the Brazilian currency could undermine the price of sugar further. However, we think greater ethanol production and consumption in Brazil will provide some support to the price over the remainder of the year. … Further fall in …
The renewed decline in oil prices has prompted another round of investment and job cuts in the sector. Slower growth in non-OPEC output should therefore support a partial recovery in prices over the next year or so, although ample global supply will limit …
US silver imports fell in May after a strong April, but exports of semi-manufactured silver surged, suggesting recovering industrial demand from the rest of the world. Meanwhile, retail appetite for physical silver remained strong in July as investors …
The prices of precious metals (PMs) have fallen sharply since mid-July as sentiment towards commodities in general plummeted. A further slump in Chinese equities and unexpectedly weak Chinese PMI numbers added to demand concerns for Platinum Group Metals …
10th August 2015
Data released earlier today by Malaysia’s Palm Oil Board show that crude palm oil production in July reached its highest monthly level since October last year. Stocks also rose sharply, adding to downward pressure on prices. … Malaysia Monthly Palm Oil …
China’s commodity import volumes were generally strong in July, for the second consecutive month. Although low prices probably encouraged buying, it is also likely that government stimulus is starting to feed through to the real economy. We expect import …
Despite a large downgrade to the outlook for the EU’s 2015 corn harvest, global supplies and stocks are likely to remain high. As such, we think the price of corn will fall further this year. … Corn prices to fall, despite lower EU …
7th August 2015
July was a tough month for energy commodities with oil and coal prices slumping again as worries about demand, prompted by the drop in the Chinese equity market, and signs of improving supply weighed on sentiment. Indeed, we have been flagging up exactly …
By setting a lower mid-point for the renminbi’s trading band the People’s Bank has sparked speculation that it is embarking on a competitive devaluation of the currency in order to shore up exports. In reality, the move was largely the result of a …
Depreciating producer currencies have played a major role in cushioning mining companies’ margins in recent years. However, with the prices of most precious metals below production costs even in local currencies, we expect that miners will be forced to …
The continued fall in China’s pig herd is likely to undermine soybean demand growth over the second half of the year. Coupled with ample supplies, we think soybean prices will end the year lower. … Weak demand to push soybean prices …
6th August 2015
Buying by global central banks picked up pace in June, with Russia once again particularly active. Going forward, we expect further official purchases to be one of several factors supporting the price of gold in the next year or two. … World Gold Official …
US crude stocks fell again last week as refinery runs surged and imports fell slightly. But production rebounded slightly and stocks of gasoline rose. … US Weekly Petroleum Status …
Surging prices of a number of agricultural commodities from mid June to early July saw investors increase the number of net long non-commercial positions. However, recent improvements in the prospects for crops in the US and tumbling prices have seen this …
The prices of almost all precious metals fell sharply last month as sentiment towards commodities in general plummeted. A further slump in Chinese equities and unexpectedly weak Chinese PMI numbers added to demand concerns for PGMs. Meanwhile, the …
4th August 2015
The rules set out by the US Environmental Protection Agency should ultimately serve to reduce demand for coal and put downward pressure on prices, even if there are lengthy legal challenges. … Obama and the EPA escalate the “war on …
