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Overview – Commodity prices struggled to find direction in November despite the release of somewhat stronger economic data. Meanwhile, developments on the US-China trade front remained a key driver of sentiment. While a “phase one” trade deal seems likely …
3rd December 2019
China’s official and unofficial PMIs rose in November, suggesting that the weakness in the manufacturing sector has eased. While this could provide some support to industrial commodity prices in the near term, we are sceptical that it will mark the …
2nd December 2019
Commodities prices were little changed this week . Prices were initially boosted by President Trump’s comments that the US and China were in the “final throes” of a trade deal. But they pared their gains as fears emerged that the signing into law of the …
29th November 2019
The prices of most industrial commodities traded in a narrow range this week in part owing to stronger-than-expected PMI data from the US and elsewhere. However, the bigger picture is that global economic growth is still relatively weak and we think that …
22nd November 2019
Recent market moves, most notably in US equities, suggest to us that there may be too much bad news priced into commodity markets. Accordingly, we expect a modest rise in commodity indices in 2020, but forecast that US equities will trade in a narrow …
21st November 2019
The price of lumber has surged in recent months. We think that prices will continue to rise in 2020 primarily on the back of ongoing strength in US housing starts and falling lumber supply from Canada . To recap, the price of US lumber has rallied by …
20th November 2019
The prices of industrial commodities tumbled this week amid uncertainty about whether a “Phase One” trade deal between the US and China will be signed and further signs of weakness in China’s construction sector. While a partial trade deal seems likely, …
15th November 2019
Palm oil prices have soared recently in part because of unfavourable weather, which has clouded the outlook for supply. At the same time, we think that demand from the world’s top consumers is set to rise strongly. As a result, we expect prices to …
13th November 2019
Commodity price moves were surprisingly muted this week considering the news that the “Phase One” trade deal between the US and China may involve the lifting of some of the tariffs already in place . That said, there is still considerable uncertainty …
8th November 2019
China’s commodity imports were generally weak in October, and we expect volumes to remain subdued in the coming months given our forecast of a further slowdown in China’s economy . The contraction in China’s imports and exports in US dollar terms eased …
There were few big moves in commodity prices this week despite some encouraging data out of China and the US, and a 25bp cut in the Fed Funds rate . Admittedly, the economic data were not uniformly positive, but should still have assuaged some concerns …
1st November 2019
There was a marked divergence between China’s October official and unofficial PMIs, which makes it difficult to gauge the underlying strength of the manufacturing sector. The rise in the Caixin PMI suggests that China’s economy may have started Q4 on a …
Overview – The apparent thaw in the US-China trade dispute gave a lift to the prices of most industrial commodities in October. However, we are sceptical that a lasting resolution to the trade conflict will be reached. Instead, we think that the ongoing …
31st October 2019
This week has been relatively quiet in commodity markets, but there could be some bigger moves in prices in the next seven days given that the Fed meets on Thursday and a raft of economic data is scheduled for release. We think that the Fed will cut …
25th October 2019
Despite the much-vaunted “mini-deal” on US-China trade, most industrial commodity prices fell this week . Uninspiring activity data across major commodity consumers, notably for the US and China, appear to have reignited fears over the health of demand. …
18th October 2019
Overview – While there appears to be little to lift spirits in the near term, we think the macro-economic backdrop for commodity markets will turn more positive during 2020. We expect global economic growth to pick up over the course of the year, which in …
China’s commodity imports held up rather better than imports of other goods in September. However, we think import volumes will tail off in the months ahead amid faltering economic activity . China’s imports and exports contracted last month. (See the …
14th October 2019
With little in the way of major economic data releases this week, most commodity prices rose on the back of news that the US and China may agree a “mini deal” as part of ongoing trade talks . This could reduce the immediate risk of a further rise in …
11th October 2019
While we broadly agree with the USDA’s latest corn supply forecasts, we are more positive about demand owing to recent changes to US ethanol policy. As a result, we expect corn prices to rise in the year ahead . The October World Agricultural Supply and …
We expect that global oil supply will remain constrained in 2020. But we also forecast somewhat stronger growth in demand next year and a pick-up in risk appetite on the back of monetary easing. As a result, we are raising our forecast of the price of …
9th October 2019
Most industrial commodity prices fell this week as concerns about global economic growth intensified . A raft of weak economic data from the US and the euro-zone seems to suggest that the recent sluggishness in manufacturing may have now shifted into the …
4th October 2019
Overview – Oil prices dipped in September despite the attacks on Saudi Aramco. In contrast, the prices of most other commodities increased owing to a rise in investor risk appetite. However, we expect US equities to fall in the coming months, which should …
1st October 2019
China’s official and unofficial PMIs rose in September, but we think this is unlikely to mark an economic turnaround not least because global demand looks set to weaken further. What’s more, signs of slower construction activity have particularly negative …
30th September 2019
As the fall-out from the attacks on Aramco began to fade, the spotlight swung firmly back to concerns about global economic activity this week with falls in the prices of most industrial commodities . What’s more, our forecast that economic indicators …
27th September 2019
Demand should start to recover next year With subdued growth in supply, the market is likely to move into deficit But stocks are high, which will act as a lid on prices In this Commodities Watch , we are initiating coverage of natural rubber . As it …
25th September 2019
There was a rude awakening for the oil market last weekend as a missile and drone attack on Saudi oil facilities, allegedly backed by Iran, removed around 50% of Saudi capacity . As the dust settled, oil prices ended the week about $5 or 7% higher. We …
20th September 2019
Given the uncertainty about the impact on supply of this weekend’s attack on Saudi Aramco, we are not changing our oil price forecasts yet. However, in this Update , we outline three possible scenarios that could develop and what they would mean for …
16th September 2019
The apparent thaw in US-China trade relations gave most industrial commodity prices a lift, but we have seen these sort of ‘goodwill’ gestures before and doubt that the two sides are any closer to resolving their underlying differences . One commodity …
13th September 2019
China’s commodity imports ticked up in August, in part due to strong infrastructure spending. But we expect them to weaken in the months ahead as temporary factors fade and construction activity tails off . China’s export growth turned negative in August, …
9th September 2019
Although the prices of most industrial commodities rose this week, we think that a sustained and broad-based recovery is still some way away . A trio of factors were responsible for this week’s rise: news that US-China trade talks will resume in October; …
6th September 2019
We continue to expect a modest rebound in coffee prices by end-2019 as currently low prices force many high-cost producers to exit the market altogether . Coffee prices have plunged since July, owing largely to a sharp depreciation of the Brazilian real. …
5th September 2019
Overview – The escalation in US-China trade tensions led to investors becoming more risk averse, which boosted the prices of gold and silver but depressed the prices of agricultural and industrial commodities. Looking ahead, we expect trade tensions to …
4th September 2019
China’s official and unofficial PMIs diverged in August. But both remain consistent with slower year-on-year growth in the remainder of 2019, which does not bode well for energy and industrial metals prices . China’s Caixin manufacturing PMI jumped to …
2nd September 2019
While the US-China trade war has continued to escalate, commodity prices have clawed back a little of their lost ground since the trough at the end of last week. This was aided in part by President Trump seeming to strike a more conciliatory tone on …
30th August 2019
While the US-China trade war has escalated, we had already expected the two countries’ dispute to deepen. Meanwhile, although a thawing of US-Iran relations could mean a return to the market of Iranian exports, this seems a long way off. As such, we see …
27th August 2019
After a quiet start to the week, Friday’s announcement of additional Chinese tariffs on US imports and Jerome Powell’s speech at Jackson Hole stirred prices (and President Trump) into action . Most industrial commodities fell as the news on trade fed into …
23rd August 2019
So far, the current global economic downturn has been driven by a marked decline in manufacturing activity, with obvious negative implications for commodities demand and prices. Less intuitively, we think that if the malaise spreads to the services …
President Trump’s decision to delay the proposed 10% tariff on just over $150bn of Chinese imports gave a lift to most industrial commodity prices this week . That said, any optimism about an improved global growth outlook was tempered by the release of …
16th August 2019
OPEC the exception, not the rule Most commodity cartels have failed to manipulate prices for very long, and we think that any future cartels in commodity markets will be no different. Arguably, the Organization of Petroleum Exporting Countries (OPEC), the …
15th August 2019
The higher-than-expected forecasts for wheat and corn production in 2019/20 included in the USDA’s latest projections have sent prices tumbling. While we think that agricultural markets are right to have turned more bearish on wheat prices, we suspect …
13th August 2019
The fall-out from Mr Trump’s threat to levy a 10% tariff on $300bn worth of Chinese imports continued to roil commodity markets this week. The prices of crude oil and most industrial commodities fell, with a particularly sharp drop in the iron ore price …
9th August 2019
China’s commodity imports jumped in July, but this comes after pitifully low volumes in prior months and, in some cases, merely reflected improved availability. As such, it is unlikely to mark the start of a sustained recovery in demand . Export growth …
8th August 2019
Yesterday’s announcement by President Trump that a 10% tariff is to be levied on $300bn worth of Chinese goods came as a shock after reports of “constructive” trade talks between the US and China earlier in the week. While rising protectionism has …
2nd August 2019
Commodity prices plummeted yesterday in a knee-jerk reaction to the news of more US tariffs on Chinese goods. We have argued for some time that the US-China trade war was likely to escalate, and it has been a reason why we have been particularly bearish …
China’s official and unofficial PMIs both rose in July, but they remain consistent with a renewed slowdown in economic activity, which will be a key factor weighing on commodity prices later this year . The official manufacturing PMI ticked up to 49.7 …
1st August 2019
Overview – With the exception of the precious metals, most commodity prices drifted lower in July on concerns about soft demand. Given our forecast of slower global economic growth in the second half of this year, we expect the prices of most energy and …
31st July 2019
Commodity prices have largely been treading water, ahead of some major events next week . The Fed will announce its interest rate decision on Wednesday. A 25 basis points rate cut is already priced into financial markets, but anything more could prompt a …
26th July 2019
We think that the price of palm oil (PO) will rise a touch this year and pick up strongly in 2020 primarily on the back of stronger demand growth, which will shift the market into a deficit . By way of background, the price of PO has tumbled since the …
25th July 2019
The latest rally in the Baltic Dry Index (BDI) has more to do with developments in the iron ore market than trends in world trade. As such, we think that the index will fall back as the iron ore trade normalises and the reality of slower global growth and …
24th July 2019
Overview – Subdued economic growth will weigh on the prices of most industrial and energy commodities for the remainder of 2019. What’s more, our view that there will be a further escalation in the US-China trade war could have particularly negative …
19th July 2019
