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Growing upside risks to our grains price forecasts

With the Fed still hinting at more interest rate increases, the dollar strengthened and contributed to declines across most commodity prices this week. One of the few prices that did increase was the Asia LNG price, which rose by 7%. This seems connected to the ongoing heatwave in China, which could raise cooling-related gas demand in the power sector at a time of already-low hydro power output.

Next week is fairly quiet on the data front. The main release will be China’s PMIs for June. We expect them to show that services activity growth slowed, while manufacturing activity continued to struggle. If we are right, commodity prices could fall further. Closer to home, next week we will release our quarterly Commodities Outlook. On Thursday, we will also hold a 20-minute Drop-In with the Climate Economics team on the de-carbonisation challenges facing industry, including the aviation industry. It will start at 10:00 EDT/15:00 BST. Register here.

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