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Mounting signs of a rapid rebound in the Chinese manufacturing and construction sectors, as well as a further depreciation in the US dollar, offered some support to industrial commodity prices this week . However, concerns about rising virus infection …
31st July 2020
The ongoing recovery in economic activity – from lows earlier this year – will support the prices of most commodities in the second half of 2020 and into 2021. We are particularly positive on the outlook for industrial metals given that much of China’s …
29th July 2020
Despite some jitters in equity markets, commodity prices generally ended the week higher . In what is becoming a well-worn pattern, optimism about a robust economic recovery continued to build – this time in response to the final agreement of a EU …
24th July 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 …
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
A raft of positive Chinese economic data this week offered some support to commodity prices, but concerns about the rise in coronavirus infections in the US and in Latin America prevented any significant gains . Oil prices dipped on news that OPEC will …
17th 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
The prices of most commodities rose this week, with the exception of energy . In particular, industrial metal prices rose alongside Chinese equities. Elsewhere, the European economic recovery is starting to look remarkably V-shaped, despite localised …
10th 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
This week was fairly quiet for commodities, with most prices rising slightly . In particular, energy prices in the US and Europe were boosted by the partial (albeit uneven) paring back of virus-containment measures. Meanwhile, the latest batch of PMIs …
3rd July 2020
Overview – The more industrial commodities performed particularly strongly in June on the back of the ongoing revival in global economic activity. We have become more positive on the outlook for industrial metals prices this year given higher …
2nd 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
It is by no means inevitable that the coronavirus crisis puts a big permanent hole in the supply capacity of economies (i.e. their ability to produce goods and services). With the right government policies, many economies should be able more or less to …
The prices of most industrial commodities fell this week owing primarily to concerns about the spread of the coronavirus, particularly in the south of the US . Falls in equity markets also weighed on prices, at least at the beginning of the week. …
26th 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 …
Industrial commodity prices continued to claw back their virus-induced losses this week . These gains helped to extend the general rise in the prices of industrial commodities since late March, notwithstanding some hiccups along the way. The latest …
19th June 2020
The recent rally in most commodity prices stalled this week at least in part due to concerns about the scale of virus infections, particularly in the US . A stronger US dollar, falls in US equity prices and some profit-taking added to the downward …
12th June 2020
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
The prices of most commodities rose this week, as signs emerged that developed economies may be past the worst of the initial economic hit from the coronavirus. Stronger-than-expected US employment data and Chinese PMIs and additional monetary easing by …
5th 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 …
Overview – The prices of most commodities rose in May on the back of the ongoing recovery in China’s economic activity and a gradual easing of lockdown conditions in the US and Europe. We think that most prices will make further gains from here, but they …
2nd 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
The close of China’s National People’s Congress (NPC) yesterday brought with it little in the way of additional news, leaving the huge fiscal stimulus announced last Friday – which was unambiguously positive for commodities demand – eclipsed by the …
29th May 2020
Stimulus announced at China’s NPC is positive for commodities demand and prices But credit growth will be much lower than it was post-GFC Accordingly, the stimulus is unlikely to send prices soaring like in 2009 China’s stimulus spending in 2009 in the …
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
Most commodities prices rode the wave of a general uplift in investor sentiment this week . That said, prices have eased back slightly today despite encouraging signs from the National People’s Congress (NPC) in China. Although the stimulus package …
22nd 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 …
This week has provided further tentative signs of a revival in commodities demand . China’s industrial production bounced back in April and weekly data in the US suggest that the pick-up in gasoline demand is gathering pace (although it remains very low …
15th 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
Industrial commodities prices posted strong gains this week on the back of signs of a relaxation of quarantine measures in Europe and the US, which fuelled hopes that demand would recover soon. However, we maintain that most markets are still …
7th 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 …
Overview – The prices of most commodities struggled in April against a backdrop of moribund global demand. That said, the performance of energy commodities was mixed: while Brent crude and Henry Hub gas rose in price, the other energy commodities fell. We …
5th May 2020
Despite a raft of terrible economic data, industrial commodity prices ended the week broadly flat, except for oil prices which rose sharply. Attention is turning to the potential relaxation of containment measures, as several countries “pass the peak” of …
1st 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 …
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
Well-placed fears that the world is fast running out of storage for crude buffeted oil prices this week . On an extraordinary day of trading, the spot price of WTI fell deep into negative territory on Monday – closing at -$38 per barrel – for the first …
24th April 2020
Overview – At the time of writing, economic activity has ground to a halt around the world owing to virus containment measures. For the most part, commodities prices have plunged given the collapse in demand. We think a gradual revival in economic …
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
News of a record 9.7m bpd cut to output by OPEC and its allies failed to prop up oil prices, which fell again this week. As long as virus-containment measures continue to depress demand, we expect oil prices to remain low . By contrast, signs that …
17th 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 …
Despite the apparent conviction of US President Trump, much uncertainty remains over whether Saudi Arabia and Russia will manage to strike a deal in today’s OPEC+ meeting. Our best guess is that the two sides will agree to an output cut of around 10-15m …
9th April 2020
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
The price of Brent crude surged by 30% this week after President Trump suggested that Saudi Arabia and Russia were close to agreeing an eye-watering 15m bpd output cut to combat COVID-19’s hit to global oil demand. We suspect markets may have …
3rd April 2020
Overview – Oil prices plummeted in March under the weight of a collapse in demand and pledges from OPEC+ members to significantly raise output. Most other commodity prices also fell last month as the COVID-19 virus spread from Asia to Europe and the US. …
1st 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 …