Supply disruptions remain a key risk

The recent bounce in commodity prices continued this week, helped by the ongoing depreciation in the US dollar and a series of risks on the supply side which are rearing their head. Most notably, a spell of cold weather in Brazil has dampened the supply outlook for several agricultural commodities, while ongoing wage negotiations at a major copper mine in Chile threaten to end in strike action. Though we are sceptical that the weakening in the US dollar will last, we are less sanguine about the risks to supply. Indeed, were these risks to materialise and/or intensify, they may prevent prices from falling by as much as we expect by the end of the year.