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Poor Chinese manufacturing data and the prospect that US monetary policy may soon be less supportive have more than offset signs that the recession in the euro-zone is easing. Of these developments, subdued Chinese demand is the greatest threat to the …
20th June 2013
We expect the reduction in the floor price the Thai government will pay rice farmers to increase private exports and sales from government stocks, putting further downward pressure on prices. … Rice price to continue to fall as Thailand reduces …
19th June 2013
Traditional methods of calculating copper demand have been suggesting that Chinese consumption is actually falling. However, these estimates of “apparent consumption” are distorted by changes in unreported stocks, which can be very large. We would give …
17th June 2013
Fears that Western intervention in Syria could increase the risks of a broader Middle East conflict have already put some upward pressure on the price of Brent crude. However, even if tensions do continue to rise (which all the major players would want to …
The prospect of a reduction in US monetary stimulus has already begun to undermine the prices of many risky assets, from developed market equities to emerging market currencies. However, this prospect should be less of a threat to the prices of industrial …
11th June 2013
The jump in China’s imports of major commodities on a month on month basis in May was probably flattered by the easing of earlier port delays. Other incoming economic data suggest that demand remains soft. … China's underlying demand still …
10th June 2013
US lumber prices have fallen sharply over the last couple of months after what, with hindsight, looks like an earlier overshoot. Nonetheless, we expect prices to climb again over the rest of the year. … Correction in lumber prices should prove …
6th June 2013
Signs of stronger growth in the US have failed to boost commodities, due in part to the likelihood that the Fed will start to scale back its asset purchases under QE3 sooner than it might otherwise have done and to the support that this has provided to …
3rd June 2013
We think that the price of aluminium is unlikely to be able to sustain moves much outside the range of $1,800 to $2,100 per tonne over the next year or two, due to the potential supply responses in either direction. These figures are at the low end of …
31st May 2013
The twice-yearly OPEC meeting in Vienna tomorrow is likely to confirm the official production target of 30m barrels per day. But the bigger picture is that the cartel now ranks no higher than a distant fourth in the list of factors determining global oil …
30th May 2013
The recent strength in US soybean prices has been driven by fears of tight supplies as congestion at Brazilian ports delays exports. However, as the logistical problems ease and planting of the new crop in the US progresses, prices should resume their …
28th May 2013
The sub-50 reading for China’s flash manufacturing PMI today shows the fragility of the underlying demand for industrial commodities, including copper and oil, as the economic slowdown there deepens. Meanwhile, although the euro-zone manufacturing PMI …
23rd May 2013
Global copper mine output is on track to rise rapidly for a second successive year, despite a recent landslide and a tragic tunnel collapse at two of the world’s largest mines (Bingham Canyon and Grasberg respectively). In turn, higher production should …
21st May 2013
The persistent weakness in the Baltic Dry Index (BDI) is still primarily a reflection of the surge in the supply of cargo ships over the last few years. Demand for transporting dry bulk commodities has continued to rise, albeit at a slower rate. …
16th May 2013
Anglo American Platinum’s decision to scale back its planned production cuts mean that the global platinum industry is better supplied than had appeared likely. We suspect that further mine closures will thus be necessary to cause prices to rally from the …
14th May 2013
Projections of record global crop production in 2013/14 by the United States Department of Agriculture have been the trigger for renewed weakness in the prices of US grains and oilseeds. We had expected prices to drop as supply improves and think they …
13th May 2013
There are three main reasons why further monetary stimulus, including quantitative easing (QE), is likely to benefit equities more than it benefits the prices of industrial commodities, including crude oil and base metals. In summary, industrial …
Brazil is unlikely to meet its ambitious targets for oil production, but crude output could still increase by at least one million barrels per day from current levels by 2020. This would add to booming global supply from both conventional and new sources …
9th May 2013
We estimate that the volume of China’s commodity imports rose y/y for the first time this year in April. But looking beyond the positive headlines, the figures were artificially boosted by calendar effects, with underlying demand still at low levels. … …
8th May 2013
The recent rally in the price of US grains has been driven by renewed fears over supply. However, we think that these concerns are overstated and expect prices to resume their downward trend over 2013. … Grain price rally set to be short …
3rd May 2013
The prices of most major commodities fell in April due to growing concerns about the health of the global economy (and the early signs are that this weakness is continuing, for much the same reasons, into May). In particular, Brent crude dropped below the …
1st May 2013
The price of crude has recovered a little in the last few days, but hopes of a significant boost from a further loosening in global monetary policy are overdone. We are also sceptical of assertions that the recent weakness in prices is simply a seasonal …
30th April 2013
The recent slump in the prices of most commodities mainly reflects worries about the near-term outlook for economic activity, rather than any deterioration in financial conditions. We expect global growth to stay subdued, with hopes of a sustained …
25th April 2013
Concerns about the potential impact of the end of quantitative easing ebb and flow, but we remain relatively sanguine. Detailed market forecasts will follow shortly in our quarterly publications, The Capital Markets Analyst and Commodities Analyst. …
23rd April 2013
The decline in the flash manufacturing PMIs for China and the euro-zone in April, published today, triggered fresh falls in industrial commodity prices, sending copper to an 18-month low. We think that this weakness in demand will persist and that rising …
In the light of the recent sharp falls in many commodity prices, it is worth reiterating our scepticism on the durability of the “super-cycle” and on the scope for further support from China. … Where do we stand on China and the …
18th April 2013
The recent weakness supports our view that oil prices have been unsustainably high given the fragility of the global economic recovery. Over the next few years we continue to expect $100 to become a ceiling for Brent, rather than the floor that many …
16th April 2013
The trigger for the slump in the gold price since Friday appears to have been aggressive selling by speculative traders, rather than any change in the fundamental drivers. Gold has also been caught up in the broad-based weakness in commodity markets, …
15th April 2013
The gold market was hit yesterday both by the prospect of an early end to the Fed’s quantitative easing and by speculation that Cyprus could be the first of the troubled euro-zone countries to sell official reserves to ease their financial problems. The …
11th April 2013
China’s total imports accelerated in y/y terms in March, but commodity imports remained weak. In particular, we estimate that the year-on-year decline in the volume of commodity imports in the first quarter was the largest in eight years. … China's …
10th April 2013
Recent speculation about an OPEC-style producer cartel for the platinum group metals (chiefly platinum, palladium and rhodium) is unlikely to come to much. However, falling production due to cost-related closures and potential labour unrest means that the …
8th April 2013
The collapse in the prices of US grains has received the most attention recently, but commodity prices in general continued to fall in March. The main drivers of this weakness were worries about the prospects for global growth, renewed tensions in the …
3rd April 2013
Gold has been in and out of favour for well over a year, but its price has been broadly stable rather than collapsed – suggesting that underlying support remains strong. Looking ahead, a revival of demand for safe havens and inflation hedges could still …
22nd March 2013
The past few weeks have seen the re-emergence of two key factors that we expect to undermine oil prices further over the course of the year, namely a faltering in the world economy and a renewed flare-up of the financial crisis in the euro-zone. Indeed, …
19th March 2013
The prices of all the major US grains have already fallen significantly from their peaks last summer, but we expect them to decline further during 2013. … Grain prices still have further to fall as supply fears …
11th March 2013
There have been many conflicting signals recently on the prospects for China’s demand for commodities. Indeed, the February trade data, released earlier today, could be spun either positively or negatively, depending whether the focus is on exports or …
8th March 2013
The death of the Venezuelan President, Hugo Chávez, is unlikely to have a significant impact on global oil markets in the short term, although this impact could yet be in either direction. Over the longer term, changes in policy towards the energy sector …
6th March 2013
Cobalt is being added to our coverage of industrial metals from today. The price of cobalt is barely a quarter of the highs seen in March 2008, which might suggest that there is plenty of upside if the global economy continues to recover. But the key …
5th March 2013
Commodity prices fell back in February due to worries about the global economy, renewed tensions in the euro-zone and fears of an early halt to QE in the US. These factors were reflected in a stronger dollar too. While some of these concerns may be …
4th March 2013
Despite the recent weakness, we continue to expect the price of gold to reach new record highs of $2,000 per ounce later this year as global monetary policy remains supportive, the crisis in Europe flares up again, and the rally in equity markets runs out …
25th February 2013
The decline in the flash manufacturing PMI for China in February, reported today, is the latest sign that the pick-up in global manufacturing may be faltering. The equivalent US and euro-zone data were a touch weaker too. It is perhaps too early to call …
Global copper mine supply grew at its fastest rate in eight years in the closing months of 2012 and mine output is likely to grow just as quickly this year. This should enable smelters to raise their output, but it will also add to the stockpiles of …
22nd February 2013
Despite the uncertainty created by the latest FOMC minutes, we do not believe that the Fed will be in any hurry to halt its additional asset purchases completely. Nonetheless, the reaction in the markets to the possibility of an early end to QE3 has …
21st February 2013
The spreads between the prices of Brent and other crude benchmarks such as WTI and Dubai have recently widened to levels which are hard to justify on the basis of underlying supply and demand. This may well be another example of how speculative pressures …
19th February 2013
Even though the global price has already slumped by around a third over the last two years, sugar has been the worst performing of the major agricultural commodities so far in 2013, falling by another 7%. This weakness has been driven by ample supply, as …
14th February 2013
The price of cotton, which fell by around 20% in 2012, has turned around to become the best performing of the major agricultural commodities so far this year, rising by about 10%. This recovery has primarily been driven by optimism over the prospects for …
11th February 2013
It has taken two years of dismal returns and a regulatory backlash, but the consensus has finally swung round to our long-held scepticism about the “super-cycle” and the diversification benefits of investing in commodities. The danger now is that the …
8th February 2013
The value of China’s commodity imports rose y/y in January at their fastest rate since October but this may well have been due to the distortions caused by the timing of the lunar New Year as much as any recovery in underlying demand. What’s more, …
The high cost of oil reflects hopes of a strong recovery in demand at least as much as tensions in the Middle East. However, the price of a barrel of Brent probably still includes a premium of $10-15 for the possibility of more significant disruption to …
7th February 2013
One commodity-related indicator that has failed to show any signs of a revival is the Baltic Dry Index of global shipping costs, which remains more than 90% below its pre-crisis peak. Indeed, the BDI has dropped by 10% in the past fortnight, to 740. We …
