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We think that energy commodities will claw back a bit of the ground that they have lost relative to industrial metals over the next two years or so, as some cyclical factors linked to COVID-19 which have weighed more heavily on the former unwind. However, …
3rd November 2020
In the past, La Niña weather conditions in the Pacific Ocean have had a significant impact on agricultural crops and prices. In this Update we consider the risks that the development of La Niña over the coming months pose to our current agricultural price …
China’s October PMI data add weight to our view that Chinese economic growth will continue to accelerate, even though we estimate that the economy is already back to its pre-virus trend. This will support the prices of commodities in the months ahead, in …
2nd November 2020
Commodity prices have largely shrugged off the conclusion of China’s Fifth Plenum and discussion of the 14 th Five-Year Plan (FYP). This is not so surprising as the main takeaway from the event is that we will have to wait until March for any detail. But …
30th October 2020
The ongoing fiscal-led boost to domestic demand and a stronger renminbi propelled China’s commodity imports higher last month. This tallies with our long-held view that a rapid rebound in the Chinese economy will support generally higher industrial metals …
13th October 2020
China’s September PMI readings suggest that the economy is now entering a period of above-trend growth, which is indisputably good news for the prices of commodities, particularly industrial metals . The official manufacturing PMI jumped to 51.5 – a …
30th September 2020
China is ramping up its purchases of US energy and agricultural products as promised in the Phase One trade deal. But instead of reflecting a desire to meet its obligations to the US, we think China’s buying mostly reflects opportunistic purchases at low …
28th September 2020
Although a vaccine against COVID-19 may not dramatically alter the near-term economic outlook, we expect it would structurally improve the demand prospects for many commodities and therefore boost prices, particularly for crude oil . As a ‘second wave’ of …
24th September 2020
Strong demand from China will put a floor under corn and soybean consumption in 2020/21. But with record expected yields in the US, we expect corn and soybean prices to come off the boil . In the September World Agricultural Supply and Demand Estimates …
18th September 2020
Most industrial metals prices are now above their pre-virus levels, after rallying from their March lows. We reckon that the price rebound has further to go, as China’s impressive economic revival continues, and the backdrop for risky assets continues to …
10th September 2020
Brent’s recent price drop to a two-month low shows the fragile nature of its price recovery. We think that an uneven recovery in demand, combined with the hangover of vast oil stocks accumulated in the first half of this year, will limit any price gains, …
8th September 2020
China’s commodity import volumes remained high in August, reflecting the broader recovery in economic activity. We expect commodity demand to remain strong in the coming months but import volumes may ease back given the recent rise in prices of many …
7th September 2020
China’s August PMI readings support our view that the economy will return to its pre-virus trend by the end of this year, which is positive for almost all commodities prices, but especially industrial metals . That said, metals prices have already had a …
1st September 2020
The recovery in China’s hog herd will support demand for corn and soybeans in 2020/21. However, our demand forecasts are not as rosy as the USDA’s and, in any case, a strong rebound in supply will limit any price gains . In the August World Agricultural …
13th August 2020
Earlier this week, the gold price broke through the previous record set back in 2011 to reach an all-time high. Given that we now expect real yields to continue to grind lower, we have revised upwards our gold price forecast to $2,100 per ounce by …
7th August 2020
China’s industrial import volumes rose in July, which is consistent with the recovery in economic activity and opportunistic stockpiling at low prices. While final commodity demand will remain strong for the remainder of this year, China’s import volumes …
The coronavirus has changed how people live their lives and spend their money. The consumption of almost all agricultural commodities has fallen so far this year and we expect that it will take until 2022 for demand to return to pre-virus levels. As a …
5th August 2020
July’s encouraging batch of PMIs for China suggest that the robust economic rebound continued into the start of Q3. And with policy support set to be stepped up, strong Chinese activity will continue to be a fillip for commodities demand in the months …
3rd August 2020
Prolonged weakness in demand and high production will keep the cotton market in a surplus in 2020/21. As a result, we forecast that cotton prices will remain low over the next 18 months . Since the beginning of this year, the price of cotton (ICE Cotton …
24th July 2020
We have raised our forecast for the gold price, as we expect real yields to drift a little lower and remain low for some time. We now think that the price of gold will finish the year at $1,900 per ounce ($1,600 previously) and will remain elevated over …
21st July 2020
Unseasonably hot weather in Siberia in recent months has weighed on wheat production and damaged industrial infrastructure. Scientists think that future heatwaves in the region will become more common in the coming decades due to climate change. This …
16th July 2020
China’s commodity import volumes surged in June, while exports remained in the doldrums. We expect this trend to partially reverse in the coming months as higher commodity prices will curb bargain-hunting purchases and a further pick-up in economic …
14th July 2020
As the US economy continues to recover from virus-related disruption, we expect the housing and retail sectors to rebound. This, along with a stronger Canadian dollar and restricted supply (owing to social distancing measures), means that we expect the …
9th July 2020
China’s June PMIs indicated a continued improvement in domestic industrial activity, which should be positive for commodities. However, fading external demand may prove to be a headwind for exports . The Caixin manufacturing PMI rose to 51.2 in June, from …
1st July 2020
Weak demand and a recovery in supply should push the sugar market into a surplus in 2020/21. As a result, we forecast that sugar prices will remain low over the coming year . Despite droughts in major producers, including India and Thailand, the price of …
29th June 2020
In light of the recent revision to our China economic growth forecast and our expectation that the rebound in equities has further to run, we have revisited our oil price forecasts for the year ahead. We expect that constrained OPEC+ supply will not be …
25th June 2020
Recent revisions to our macroeconomic and markets forecasts are more positive for industrial metals than oil, and they support our slightly bearish outlook for the price of gold . The starting point for our commodity price analysis is our view on the …
Palm oil consumption will be hit hard by weak biofuel demand in 2020. However, we think that consumption will rebound strongly next season as higher biodiesel mandates incentivise more biofuel production. As a result, we expect palm oil prices to rise …
10th June 2020
Although China’s commodity imports volumes dropped in May, we expect the recent infrastructure-related fiscal support measures to lift domestic demand and commodity imports in the coming months . China’s exports fell by 3.3% y/y in May in US dollar terms, …
8th June 2020
Consumption of natural rubber (NR) will be hit by sharply lower vehicle production this year. That said, we think that a revival in both demand and oil prices later in the year should give a lift to NR prices . Like most commodities, the price of natural …
5th June 2020
China’s latest raft of PMIs showed a continued improvement in industrial activity in May, which is positive news for commodities demand. However, the pace of recovery remains slow . The Caixin manufacturing PMI picked up to 50.7 in May, from 49.4 in …
1st June 2020
Our forecast that the Brazilian real will recoup some lost ground by end-2020 should put upward pressure on the prices of its commodity exports. However, other factors, such as the health of the Chinese economy, are likely to be more important drivers of …
27th May 2020
At the time of writing, we still lack the detail on China’s policy plans. That said, the headline expansion in the budget deficit and plans to boost credit growth are unequivocally positive for commodities demand – particularly industrial metals, but …
22nd May 2020
While we generally agree with the USDA’s latest projections for 2019/20, we suspect that they are being too optimistic on agricultural supply in 2020/21. Nevertheless, we expect a pick-up in corn output will shift the market into a surplus, which will …
13th May 2020
China’s commodity imports have held up well so far this year, but weak external orders and subdued domestic demand point to lower volumes in the months to come . China’s exports rebounded strongly in April, rising by 3.5% y/y in US dollar terms (see our …
7th May 2020
The partial recovery in the S&P 500 suggests a return of investor risk appetite. But commodity indices have plumbed new lows. We think a couple of points are worth making about this apparent inconsistency, the most important of which is that it is largely …
1st May 2020
China’s official and unofficial PMIs dipped in April, almost entirely owing to weak export orders. A strong performance by the construction sector provides some relief for industrial metals prices, but there was little in the data to give much of a boost …
30th April 2020
The spot price of WTI turned negative yesterday in large part owing to the nature of trading in the futures market. That said, the price slump has some fundamental underpinning as demand is very weak. We expect that storage constraints will keep the price …
21st April 2020
The unprecedented 9.7m bpd output cut announced by OPEC+ will merely reduce the oversupply of oil in the second quarter. But assuming full compliance, and an involuntary drop in North American production, the market could fall into a deficit later in the …
14th April 2020
After collapsing in January and February, China’s commodity exports stabilised last month. But with economic activity outside China now in the doldrums, this is unlikely to last. Meanwhile, China’s imports of crude oil and copper remained reasonably …
Export restrictions and stockpiling associated with the coronavirus may continue to support the price of Thai rice for the next few months. However, we expect that prices will fall back by the end of this year as the virus containment measures are lifted …
8th April 2020
Although China’s official and unofficial PMIs improved in March, the underlying picture is that the economy remains weak and is unlikely to offer much support to commodity prices . The Caixin manufacturing PMI jumped from 40.3 in February to 50.1 in March …
1st April 2020
We think there will be some permanent loss of commodity consumption in 2020 owing to virus-related disruption to activity, but we do see prices picking up later this year as economic growth starts to revive . Few would dispute that measures to contain the …
26th March 2020
Stockpiling and labour shortages associated with the coronavirus have supported the prices of some agricultural commodities, particularly the grains, in recent weeks. However, once the virus-related containment measures are lifted, we think that their …
25th March 2020
While the price of Brent has dropped by nearly 60% since January, agricultural prices have so far held up comparatively well. Although we wouldn’t rule out agricultural prices falling further, the recent divergence in prices reveals that the relationship …
24th March 2020
As commodity prices continue to flash red, this Update summarises how we think things will play out from here. In the near term, we suspect that further price falls are in store, regardless of policy support. Instead, it will be signs that the virus is …
18th March 2020
In the last few weeks, we have revised down our forecast for global economic growth this year owing to the hit to activity from the coronavirus. At the same time, we now expect looser global monetary conditions. As a result, we have revised up our …
13th March 2020
Even before OPEC+ abruptly abandoned output cuts, oil had fared far worse than most other commodities. Some of this can be explained by oil’s greater use in the forms of economic activity most affected by virus containment measures, such as transport. And …
10th March 2020
Against a backdrop of a coronavirus-related slump in demand, Saudi Arabia appears to have abandoned efforts to balance the oil market and is instead aiming to protect market share. Its pledge to significantly raise production from April will result in a …
9th March 2020
China’s commodity exports collapsed in the first two months of 2020. In contrast, commodity imports held up relatively well, but this probably reflects the greater logistical challenge faced by outbound shipments. And with almost all high-frequency …