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The prices of almost all the major commodities fell sharply last month as sentiment plummeted, despite a deal to bailout Greece earlier in the month. Industrial metals and energy commodities suffered the most from another slump in Chinese equities, with …
3rd August 2015
Last week’s negative sentiment towards commodities spilled over into this week as the prices of most commodities fell further, albeit to a lesser extent. Even the upward revision to US GDP in Q1 and the first release of stronger numbers for Q2 did little …
31st July 2015
The price of US lumber fell almost 30% between the start of the year and mid-May, weighed down by a poor start to the year for US housing starts. After a brief rally in June, the price has slumped again, despite home builder confidence remaining high. In …
Silver might soon be in a shortage as low commodity prices prompt further capital expenditure cuts across primary and secondary mines. Silver is often mined as a by-product of copper, gold, zinc, and lead. Much like silver, these metals have seen their …
The strong possibility of an El Niño event this winter could mean slightly lower demand for natural gas for heating and less disruption to offshore production. However, any impact from El Niño is likely to be negligible and more than offset by falls in …
30th July 2015
With huge soybean supplies likely to push down the price of soy oil, we expect demand for palm oil to remain weak. Combined with high stocks, we think the price of palm oil will fall further this year. … Weak demand will push palm oil prices …
US oil stocks fell last week by much more than expected. Oil production also took a sharp tumble as lower prices continue to take their toll. … US Weekly Petroleum Status …
29th July 2015
The price of US wheat has been on a rollercoaster over the past two months. However, with high global stocks and a stronger US dollar, we think prices will trend down over the remainder of the year. … High inventories & strong US dollar to wilt wheat …
Oversupply and the looming return of exports from Iran are undoubtedly weighing on oil prices. However, prices are likely to continue to be more influenced by sentiment towards commodities in general and by developments in China in particular. … China and …
28th July 2015
The slump in platinum prices to the lowest level in over six years has forced South Africa’s mining companies to restructure, leading to job cuts. With the situation between labour unions and miners getting tenser, we believe that there is an increasing …
Mainland China’s gold imports from Hong Kong fell in June after a strong May. However, we expect total imports by China and India to pick up in the second half of the year as low prices attract a fresh wave of buying. … China's gold imports …
27th July 2015
Sharp falls in the cost of drilling and fracking shale oil wells mean that some firms can now be profitable even when oil prices are extremely low. This should help to reduce the sharp declines in oil production from US shale wells and could even set the …
Central banks have become major buyers of gold, accounting on average for about 10% of total gold demand over the past five years. The primary driver of central banks’ gold buying continues to be diversification away from the US dollar with some also …
Sentiment has soured dramatically in the past week with the prices of almost all commodities falling sharply. Ironically, many of the same commentators who continued to peddle the “supercycle” hypothesis long after prices began to weaken are now …
24th July 2015
Renewed strength of the US dollar over the past month and a deterioration in sentiment towards commodities in general as an asset class, have been headwinds for commodity prices. However, short-term supply concerns have tended to dominate agricultural …
Data on Asia’s Q2 cocoa grindings revealed a 12% y/y decline, the fourth consecutive y/y fall. This follows data released last week which showed continued weakness in North America and Europe. … Asia Cocoa Grindings …
Today’s weak PMI reading from China will reinforce the negative sentiment towards commodities, notably industrial commodities, but demand should still pick up on further policy easing. Meanwhile, slightly softer numbers from the euro-zone confirm it is …
Wet weather in the first half of July meant that the amount of sugar cane harvested in Brazil fell 37% compared to the second half of June. As a result, both sugar and ethanol production dropped sharply. … Brazil Sugar Production (1st-16th …
23rd July 2015
In an earlier Precious Metals Update , “Quantifying the downside – and upside – for gold” (13 th March), we suggested that the gold price could fall as low as $850 per ounce in a worst case scenario. We stand by that analysis. Nonetheless, our base case …
Despite slowing auto sales in China, we believe autocatalyst demand for platinum and palladium will increase by at least 3% in 2015, helping to underpin our positive view on the prices of both metals. While recent price weakness has prompted us to revise …
The recent deal between Iran and the Wes tmeans that it is now very likely that substantial volumes of oil from Iran will return to the market. (We note that although a final agreement is not guaranteed, it seems very probable.) In this Energy Watch , we …
The sharp rebound in the Baltic Dry Index (BDI) since the end of May has been seen by some as a harbinger of a more positive outlook for demand and prices of bulk commodities. However, we would argue that while the recent upward trend in the BDI might …
Broad-based weakness saw industrial commodity price indices slip between mid-June and mid-July. The S&P GSCI agriculture index bucked the trend, although it too has eased back recently. What’s more, the past month has highlighted the poor performance of …
22nd July 2015
World Steel Association (WSA) data for June show a 2.4% y/y decline in global steel output, with falls in most of the largest producers. … Global Steel Production (Jun. …
US crude stocks rose last week as another unseasonal increase in commercial inventories was complemented by an addition to the Strategic Petroleum Reserve. … US Weekly Petroleum Status …
Sentiment towards commodities as an asset class has rarely, if ever, been more negative. This is understandable given the persistent weakness of prices and the headwinds on both the demand and supply side. However, we believe that the mood is now …
China’s imports of agricultural commodities were generally strong in June, suggesting a pick up in underlying demand. However, opportunistic buying due to lower prices is likely to have been a factor. … China’s corn and wheat imports surge in …
21st July 2015
Prices may be plumbing new lows, but the detailed Chinese trade data are pointing to some positive trends in metal demand. In particular, the surge in nickel imports in June suggests that the domestic market is tightening. … China's refined nickel imports …
We think that sentiment towards gold is now excessively negative. Nonetheless, given the difficulty in valuing an asset that pays no income and the importance of safe-haven demand, which is also largely subjective, the current market mood cannot be …
20th July 2015
According to the International Aluminium Institute (IAI), global aluminium production slipped by less than 1% m/m in June, but still grew by over 10% y/y in the first half. However, output in the world ex-China fell by 2% on the month. … Global Aluminium …
Losers again outweighed winners this week. Oil dropped in anticipation of the easing of sanctions on Iran, although the near-term prospects for prices may depend more on sentiment towards China and the dollar. Wheat fell on more favourable weather …
17th July 2015
Today’s confirmation that China has added to its official holdings of gold since 2009 is not necessarily bullish for prices. This is buying that has already taken place and the increase was (arguably) less than might have been expected given the surge in …
The latest European and North American cocoa grinding data continue to point to subdued demand. Combined with a rebound in Ghanaian production, we think that the price of cocoa will fall this year. … Subdued demand will undermine cocoa …
Tin demand is expected to pick up after a weak start to this year, but the main case for higher tin prices lies in a tightening supply profile. We expect ore exports from Myanmar to slip in the second half of the year which, coupled with lower Indonesian …
16th July 2015
Over the past month, precious metal (PM) prices have slumped as the correction in equity prices in China damaged confidence in global commodity markets while investors shrugged off the threat that Greece might leave the euro-zone. Indeed, we recently …
US crude stocks began falling again last week, but the decline was small, barely making up for the earlier unexpected rises. What’s more, gasoline stocks barely moved despite the US driving season being in full swing. … US Weekly Petroleum Status …
15th July 2015
The price of cotton has been one of the better performing among agricultural commodities this year. However, we think prices are likely to fall as China seeks to sell its huge cotton reserves. … Sales of China’s cotton stocks to push prices …
14th July 2015
Today’s announcement of the deal reached between Iran and the West should, eventually, allow Iranian oil exports to return to their previous levels. However, the deal could still be disrupted by hardliners in both Tehran and Washington. In the short term …
Last month’s increase in supply from OPEC just adds to the glut of oil already in the market. And even with strong growth in demand over the next year, OPEC still expects the market to be well supplied. … OPEC keeps the taps firmly …
13th July 2015
After plummeting last week, iron ore prices have stabilised at around $50 per tonne. However, there appears to be little to support prices given that we expect a contraction in China’s steel output this year. Indeed, we only expect prices to find support …
Even though we do not expect the restrictions on US crude oil exports to be lifted anytime soon, there is still plenty of scope for exports to grow rapidly. … US oil exports muscle in on an already crowded …
Although market prices reacted positively to the USDA’s latest WASDE report, there is no evidence to suggest that world grain and soybean supplies are facing a significant tightening. We think the most likely path for prices over the remainder of the year …
China’s commodity import volumes were generally strong in June, although copper imports fell to a four-month low. We think government stimulus and infrastructure spending will boost demand for industrial raw materials in the second half of this year. … …
Global central banks continued to buy gold for diversification purposes in May. Buying was mostly concentrated among emerging markets’ central banks, with Russia once again particularly active. … World Gold Official Reserves …
June was a relatively quiet month for energy markets. However, since the start of July oil prices have tanked as worries about demand, prompted by crisis in Greece and China, and signs of improving supply weighed on sentiment.Indeed, we have been flagging …
10th July 2015
Commodity investors could be forgiven for a huge sigh of relief that this week is over. The combination of the crisis in Greece and – especially – worries about the fallout from the slump in China’s stock market hit oil and metals prices hard, although …
Data released earlier today by Malaysia’s Palm Oil Board show that although crudepalm oil production declined in June, it was still 12% higher y/y. Inventories alsoremain significantly higher on a year-on-year basis. … Malaysia Monthly Palm Oil Data …
US silver imports rose sharply in April, suggesting strong appetite from the second biggest consumer. Indeed, the US Mint ran out of coins last week as investors bought on falling prices. However, a slowdown in semi-manufactured silver exports suggests …
After a strong start to the year, South Africa’s platinum group metals (PGM) production fell substantially in May. This underpins our view that continued power disruptions, coupled with an increased risk of renewed industrial unrest, will cause production …
9th July 2015
Rising ethanol output in Brazil to meet domestic demand should help lift the price of sugar this year. We forecast the benchmark price at end-year at 13.5 US cents per pound, up from 12.3 cents today. … Ethanol demand in Brazil to support sugar …
