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Grain prices to stay historically high

Grains prices have skyrocketed since the Russian invasion of Ukraine as fears of supply disruption have intensified and energy costs, which feed into agricultural production costs, have soared. In this Commodities Watch, we consider the impact the war could have on the grain market and prices in 2022.

Olivia Cross Assistant Economist
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Commodities Update

Gloomy outlook for use of agriculturals in industry

Deteriorating global economic growth over the coming quarters will weigh on industrial demand for cotton, natural rubber and lumber. That said, high oil prices will offer some support to cotton and natural rubber prices, and our expectation for rate cuts in the US in late 2023 could boost the price of US lumber.

10 August 2022

Commodities Update

China’s copper imports are the only bright spot

Commodity import volumes remained lacklustre in July, consistent with subdued activity in heavy industry and construction. We think import growth should tick up in the coming months in response to higher infrastructure spending and a modest pick-up in activity. But renewed lockdowns pose a downside risk. Oil and the Gulf Drop-In (9th Aug): What’s the outlook for oil prices and what does that mean for Gulf economic outperformance? Join economists from our Commodities and Emerging Markets teams for this 20-minute briefing. Register now.

8 August 2022

Commodities Weekly Wrap

Oil prices fall, but supply risks remain

In a week of relative financial market calm, there was a pause in the large, sentiment-driven swings that have characterised most commodity prices in recent weeks. Instead, prices seemed to take direction from more fundamental drivers. That said, the largest moves were to the downside. Fears about softer demand have weighed particularly heavily on oil prices. But, we would not place too much emphasis on one week of price moves. Volatility in commodity prices has been incredibly high in recent months, and given the scale of supply risks that remain, we suspect there is scope for oil prices to recover some ground. Next week, we’re expecting trade data from China to show that weakness in the construction sector kept imports depressed in July, which will probably weigh on industrial metals prices. However, we expect metals prices to receive some support from a pick-up in Chinese economic activity in the coming quarters. Indeed, despite the deteriorating market backdrop, we suspect that the sharpest falls in industrial metals and agricultural commodities are now behind us.

5 August 2022

More from Olivia Cross

Latin America Economics Update

Signs of life in Venezuela’s oil sector

Oil production in Venezuela has been showing signs of life, and there is probably scope for further gains in the near term. But it would require a lifting of sanctions and significant investment over many years to bring production back to levels seen a decade ago, which seems unlikely under the current Maduro government. And even if there is an eventual turnaround in oil production, this may only come after global demand peaks for Venezuela’s highly-polluting oil as the world transitions towards cleaner energy. In light of the wider interest, this Latin America Economics Update is being made available to clients of our Energy Service.

21 February 2022

Latin America Economics Weekly

Regional inflation troubles, Costa Rica votes

The recent batch of January inflation data across Latin America made for grim reading and, despite the hawkish response by central banks, inflation rates will remain high until much later this year. Otherwise, investors have breathed a sigh of relief at the result of Costa Rica’s recent general election, although it will still be tricky for the new government to push through the harsh fiscal austerity outlined under the country’s IMF deal.

11 February 2022

Latin America Data Response

Brazil & Mexico CPI (Jan.)

The fall in Mexican inflation to 7.1% y/y suggests that the headline rate has peaked, but the central bank will remain concerned about rising core inflation. As such, we expect another 50bp rate hike, to 6.00%, at Banxico’s meeting tomorrow. Elsewhere, although Brazilian inflation ticked up in January, it is likely to start falling again from this month, allowing Copom to slow the pace of its tightening cycle.

9 February 2022
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