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There are clearly many ways in which tensions between Iran and Israel could escalate and push up oil prices following the Iranian drone strike at the weekend. But the risk that a conflict involving Iran disrupts oil production in the Gulf states is much …
15th April 2024
We think the price of gold will ease back from current record highs by end-2024, but falling US Treasury yields and some softness in the US dollar will keep the price elevated. Similarly, we expect the silver price to fall, but it will outperform gold. We …
12th April 2024
China’s energy and industrial metal imports were generally strong in the first quarter. We expect them to hold up well in the coming months as fiscal stimulus continues to support construction activity, but we expect import growth to subside later in the …
Wheat prices have been in decline for most of the past two years. We think that they are now near their trough, but the prospect of another good global harvest in 2024/25 means that we shouldn’t see a notable uptick in prices any time soon. Wheat prices …
9th April 2024
China’s PMI surveys in March are consistent with some improvement in economic activity and solid commodities demand. We think that government stimulus will continue to boost economic activity in the coming months and in turn support the prices of most …
2nd April 2024
The collapse of the Francis Scott Key bridge in Baltimore this week is unlikely to have a large impact on global energy flows. For oil, flows of crude and refined products to or from Baltimore are tiny. More coal is exported from Baltimore, but the scale …
28th March 2024
The preliminary China trade data released today suggest that China’s commodities demand was robust in the first two months of the year. Crude imports should stay elevated, but iron ore and coal imports may trend lower over the next few months. Growth in …
7th March 2024
China’s government is planning further fiscal loosening and hinting at rate cuts this year, with the aim of boosting economic activity. We think the policy backdrop is sufficient to support commodities demand this year, although for metals used in …
6th March 2024
China’s PMI surveys suggest that manufacturing activity held steady in February and are consistent with stable, if unexciting, growth in commodity demand. That said, we continue to expect a near-term pick-up in activity owing to policy support, which may …
1st March 2024
We think that the gold price will rise in each of the next couple of years, driven by the Fed cutting rates a little quicker than is priced into markets, falling US Treasury yields and a softening US dollar. The gold price has taken a small leg-down since …
Carbon price not out of the woods yet …
22nd February 2024
The effects of El Niño will cause cocoa harvests in Côte d’Ivoire and Ghana, which account for more than half of global output, to fall by around 20% this year. But the related surge in cocoa prices means that, if anything, overall incomes are likely to …
14th February 2024
After a sweet start to the year, sugar prices should take on a more sour note over the rest of 2024. Prices will fall back as El Niño comes to an end and the supply outlook improves but any relaxation of India’s sugar export curbs will only be modest. …
8th February 2024
China's PMI surveys showed some signs of strengthening in January. But we still think they understate the strength of metals demand, which we expect to hold up fairly well this year. The latest China PMI surveys continue to tell slightly different …
1st February 2024
After a subdued 2023, we think the copper price will fare much better this year. We expect supply growth to moderate, while demand growth will be bolstered by the green transition. The copper price ended 2023 almost flat on the year. Consumption growth, …
19th January 2024
Energy prices seem historically high at first glance. However, that is not strictly the case. After adjusting for inflation, oil and US natural gas prices are already at or below pre-pandemic levels. Meanwhile, gas prices are still very high in the EU and …
Perhaps surprisingly, the latest escalation in Middle East tensions has not prompted a surge in oil prices. We think this is because, so far, oil output is unaffected. Moreover, we suspect it also reflects concerns about weak demand, strong supply growth …
16th January 2024
China’s commodity imports were generally strong in 2023 and while growth rates will probably slow this year, we expect volumes to remain high in the coming months. China’s export volumes edged up in December and remained close to a record high fuelled …
12th January 2024
China PMI surveys suggest that the economy lost momentum in December, but we suspect that the surveys are not reflecting economic reality. Activity and import data all point to resilient commodity demand. Either way, the construction PMI rose again last …
2nd January 2024
The high profile announcements from COP28 around renewable capacity pledges and fossil fuel usage are ambitious, but strike us as either overly optimistic or vague. While we think renewable energy consumption will increase markedly, fossil fuel usage is …
21st December 2023
The attacks in the Red Sea are the third major disruption to maritime transport this year, alongside low water levels in the Panama Canal and collapse of the Black Sea Grain Deal. Much will depend on how long the disruptions last, but we think that they …
19th December 2023
China’s commodity imports mostly rose in November, but there was a sharp drop in crude oil imports. We think that non-oil commodity import volumes will hold up in the coming months on the back of looser fiscal policy, but current high stocks could …
7th December 2023
Cocoa prices neared a 45-year high in November on the back of concerns about supply from Côte d’Ivoire and Ghana. Constrained supply alongside high seasonal demand will, in our view, continue to support high cocoa prices through 2024, until new supply …
6th December 2023
Rising OPEC+ output in Q2 2024 should leave global crude supply less constrained than we had previously expected. This, together with only modest growth in global oil demand, should push the crude market into a small surplus in Q4. Accordingly, we have …
4th December 2023
China PMI surveys suggest that the economy flatlined in November, but there was good news for commodity demand with the relative strength in the construction PMI. We suspect that underlying activity is stronger than the PMIs and that this will support …
1st December 2023
In this Global Economics Update , we describe eight of the biggest risks to our economic forecasts for 2024. The unusual nature of this cycle and uncertainties surrounding the transmission of monetary policy mean that the biggest risks relate to central …
30th November 2023
We have raised our gold price forecast to reflect the current heightened geopolitical risk. We think the price will rise further next year as the limited fallout from the conflict won’t prevent the US Fed from starting to cut interest rates in 2024. Our …
9th November 2023
China’s import data for October indicated that its demand for commodities remains robust but we think that further growth in the next couple of months is likely to be modest. China’s preliminary trade data for October, released today , showed a …
7th November 2023
The PMI surveys released so far for China weakened in October with the manufacturing PMIs falling back into contractionary territory. We think China’s demand for commodities will be supported by further fiscal stimulus over the next few months, but a …
1st November 2023
We think the cautious oil market reaction to the outbreak of conflict in Israel probably reflects the huge uncertainty about the eventual outcome, but also a somewhat lower “Middle East” risk premium. For context, the Brent crude oil price has risen by …
26th October 2023
China imported fewer key commodities in September than in August, but its underlying demand for commodities, especially fossil fuels, remains strong and is only likely to strengthen from here. China’s preliminary trade data, released today , showed m/m …
13th October 2023
The conflict between Hamas and Israel will negatively affect Israel’s natural gas exports. However, the bigger concern for global natural gas prices is the risk of the conflict spreading. The European natural gas price has risen by about 30% w/w to €48 …
12th October 2023
China’s recent commodity demand has been stronger than might have been expected given the weakness of its economy and commodity-intensive property sector in particular. This partly reflects a step-up in infrastructure spending and resilience in …
The price of wheat and corn will stay historically high for now, as Russia’s withdrawal from the Black Sea Grain Initiative has re-ignited concerns about supply from Ukraine. We think that prices will drift lower into 2025 as supply from other producers …
11th October 2023
Note: We discussed the outlook for oil prices and the geo-economics around the conflict between Israel and Hamas in a Drop-In on 9th October. Click here to watch the recording. First and foremost, the renewed fighting between Hamas and Israel since the …
9th October 2023
The sell-off in bond markets has taken a breather today, helped in part by softer data on the US labour market. However, the scale of the moves over the past week has invoked comparisons to previous financial crises that have been caused by sharp moves in …
4th October 2023
The latest above-50 readings in China’s PMIs are consistent with our view that China’s demand for commodities will remain solid in the second half of this year, but not grow strongly. The China PMIs released over the weekend pointed to fairly stable …
2nd October 2023
We expect that the global cotton market will be finely balanced in 2023/24 as demand picks up and supply falls across key producers. We forecast that the US cotton price will rise gradually from here, but will not revisit the highs of 2022. The cotton …
18th September 2023
China’s commodity import volumes rose strongly in August compared to July. Crude oil imports were probably supported by the ongoing recovery in the aviation sector, which we expect to continue in coming months. But greater enforcement of steel output …
7th September 2023
While doom and gloom builds around China’s growth, PMIs for August provided some encouragement this week, even if they didn’t paint a picture of booming commodities demand. They suggest infrastructure spending has begun to support metals demand and that …
1st September 2023
We think that Arabica and Robusta coffee prices will remain historically high over the next 12 months or so, but especially the Robusta price owing to greater El Niño-related supply risks. With that said, we forecast that global coffee supply will …
15th August 2023
Natural gas prices were the biggest mover in commodity markets this week, jumping higher on the back of news of potential industrial action at LNG plants in Australia. We don’t think gas prices in Europe are likely to return to their peaks of last year , …
11th August 2023
China’s commodity import volumes fell in July compared to June. Policy support should help lift metals imports over the next few months. And although crude oil imports fell sharply, we think that rising international aviation to and from China will …
8th August 2023
Saudi Arabia’s announcement yesterday that it would extend its unilateral oil production cut of 1m bpd into September sent the Brent crude oil price climbing to $85 per barrel, where it remains today. We think the price will remain at around this level …
4th August 2023
We think the price of rice is set to climb after India’s additional rice export restrictions have exacerbated global shortage concerns. For now, though, we don’t expect other major producers to follow suit. India recently tightened rice export …
1st August 2023
China’s PMIs suggest that commodities demand has come completely off the boil. For the recent rally in industrial metals prices to be sustained, China’s policymakers will have to deliver on promises of stimulus. In continuing a recent theme, the official …
El Niño is coming but the picture is more nuanced than one of doom and gloom for global production of all crop types. For corn, soybeans, wheat and rice, larger harvests in some regions can outweigh declines in others. For prices, there are still upside …
14th July 2023
China’s commodity import volumes remained high in June, helped by the economic re-opening, but they were held back by softening input-related demand for the manufacture of goods for export. As economies in Europe and the US flirt with recession, this will …
13th July 2023
Not so long ago, a higher 10-year TIPS yield almost invariably meant an underperformance of US “growth” stocks vis-à-vis their “value” peers, a lower gold price, and a stronger dollar. That’s changed in 2023, though, with the relationships weakening …
The likelihood of an El Niño event in the second half of this year adds to upside risks to global inflation and downside risks to activity. For the advanced economies, higher prices of agricultural commodities could slow the decline in food inflation. But …
12th July 2023
