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It’s been a mixed week for commodity prices. Industrial metals price generally struggled as activity surveys for China paint a grim picture of demand . (See Chart 1.) We suspect prices will tread water over the rest of the year as Chinese fiscal …
4th August 2023
The outlook for global agricultural supply has deteriorated since the start of the year as a result of extreme weather, the end of the Black Sea Grain Initiative, the prospect of an El Niño weather event and rising agricultural protectionism. We have …
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 …
Global energy consumption has increased in most countries over the past century (1) and has long been dominated by fossil fuels (2) . Energy consumption typically rises in tandem with income. We forecast that global incomes will rise in real terms over …
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 …
The message from electric vehicle sales data is now clear: the EV revolution is alive and kicking and poses important implications for oil demand. We are slightly more optimistic on the pace of EV adoption than other forecasters and suspect the drag on …
31st July 2023
The rollout of electric vehicles is the greatest structural shift facing the oil market. The message from the stark increase in EV sales over the last few years is clear: the EV revolution is alive and kicking. In the US, there has been a clear …
Most commodity prices rose this week on hopes of Chinese fiscal stimulus and a “soft landing” in developed markets. That said, a stronger US dollar later in the week meant that the prices of precious metals fell w/w. The star performer, however, was the …
28th July 2023
In a week when the US dollar strengthened and the 2-year US Treasury yield rose, agricultural and energy commodity prices still climbed on the back of supply concerns. In the case of agriculturals, those relate to Russia pulling out of the Black Sea Grain …
21st July 2023
China’s recent announcement of export restrictions on two metals used to make semiconductors serves as a reminder that China dominates production of metals needed for the green transition. We have warned in the past that the green transition is unlikely …
20th July 2023
For the most part, commodity prices rose this week. A weaker US dollar in the wake of a lower-than-expected June CPI reading in the US was a key factor boosting prices. Not surprisingly, the prices of the precious metals rose sharply (1) . Chart 1: US …
14th July 2023
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 …
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
Despite the flurry of macro data, it was a relatively quiet week for most commodity prices. Generally, a slight weakening in the US dollar, on net, contributed to small price rises. Oil market deficit just got deeper Oil prices were among the largest …
7th July 2023
How will the combination of El Niño and human-driven global warming affect commodities and economic performance over the short and long term? … El Niño – Macro, policy and market …
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After fluctuating between $500 and $600 per 1,000 board feet for most of this year, we expect the US lumber price to fall from around $520 today to $475 by the end of the year due to weaker demand. The key risk to our forecast is that concern grows about …
5th July 2023
We recently held a Drop-in titled “Industry’s decarbonisation challenge – From aviation to property”, which you can view on-demand here . This Update addresses some of the questions we received during the event, including those that we did not have time …
3rd July 2023
China’s PMI aren’t consistent with some of the worst fears around China’s reopening recovery and weak commodities demand. But neither are they positive enough to warrant the boost to prices, such as steel, last month. For that, hopes of fiscal stimulus …
There wasn’t a consistent direction to commodity prices this week. Natural gas prices in Europe and Asia rose (1) , indicating stronger competition for LNG cargos. Meanwhile, most industrial metals prices fell due to pessimism around the outlook for …
30th June 2023
Overview – We expect most commodity prices to struggle this year against a backdrop of a stronger dollar and deteriorating investor risk appetite. Energy-related commodities will be the exception. We expect prices to tick up later in the year owing to …
29th June 2023
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% (1) . This seems …
23rd June 2023
If the weather forecasters are right, El Niño conditions have arrived in the Pacific and are set to build over the next few months. The negative impact on agricultural production will depend upon the strength and duration of these conditions but sugar, …
Most prices rose this week (1) , helped by a weaker dollar, stronger-than expected US retail sales in May and interest rate cuts by the People’s Bank of China. Natural gas prices rose particularly sharply due to a number of unrelated disruptions to …
16th June 2023
The oil price ended the week flat despite Saudi Arabia pledging to cut output by 1m bpd in July at the OPEC+ meeting last weekend. Most other commodity prices rose, supported by China’s May trade data which showed strong growth in most commodity imports. …
9th June 2023
Overview – Most commodity prices have moved lower over the past month as concerns about demand loomed large and the US dollar strengthened. We think that prices will continue to struggle over the next few months, but energy and metals prices should rise …
7th June 2023
Growth in China’s commodity imports generally was strong in May, with a notable rise in crude oil imports. While the data are consistent with our above-consensus outlook for China’s growth this year, a note of caution needs to be applied. Export demand …
Oil output will be more constrained in the second half of this year if the OPEC+ members stick to their recently-announced production quotas. However, we have also raised our forecast of Russian production given the persistent strength in its exports. As …
5th June 2023
It was a week of two halves, with prices initially falling before the passage of the US debt ceiling bill and a strong US May employment report saw prices recoup some of those losses later in the week. Attention is now turning towards the OPEC+ meeting in …
2nd June 2023
China’s PMI surveys suggest that the economic recovery is ongoing, but the pace of growth has slowed. While a lower reading for construction activity is a negative for metals prices, the persistent strength of the services sector is consistent with our …
1st June 2023
Commodity prices generally fell this week, as investors’ expectations for the Federal Reserve’s policy rate rose on concern about the persistence of high inflation. The dollar also strengthened. Declines in many equity indices also pointed to a risk-off …
26th May 2023
Dealmaking was a major driver of commodity prices this week. The 11 th hour extension of the Black Sea Grain Initiative alleviated fears of Ukraine’s grain exports being cut off from world markets, pushing corn and wheat prices down. And in the US, …
19th May 2023
Overview – Most commodity prices have moved lower over the past month as concerns about demand have intensified and risk appetite has soured. We think prices will continue to struggle over the next few months as tight monetary policy feeds into slowdowns …
16th May 2023
Note: We’ll be discussing the radical shake-up facing global energy markets and our long-term energy demand and climate forecasts on Wednesday, 17th May at 10:00 EDT/15:00 BST. Register here. The demand backdrop for commodities appears weak. While oil …
12th May 2023
China’s commodity imports were generally weak in April. We suspect that import volumes generally could soften a bit further as any reopening effect on commodity demand fades and export demand deteriorates owing to sluggish growth in the rest of the world. …
9th May 2023
Most commodity prices, but especially energy and industrial metals, fell this week. Concern about demand in advanced economies, particularly in the US due to the banking sector problems, contributed to the declines. What’s more, China’s April PMIs …
5th May 2023
The key message from the latest China PMIs is that whilst China’s economy is likely to grow strongly this quarter, momentum is fading. This will be one factor weighing on commodity prices in the near term. China’s Caixin manufacturing PMI fell from 50.0 …
4th May 2023
Commodity prices generally fell earlier this week on the back of investors’ growing concerns about the outlook for commodities demand. Later in the week, the release of softer-than-expected US Q1 GDP data did nothing to soothe those fears. We expect …
28th April 2023
The global energy market is in the early days of a radical redesign due to the need to cut greenhouse gas emissions. In this Focus , we introduce our long-term energy market forecasts, which are characterised by continued growth in energy consumption and …
27th April 2023
In this new quarterly publication, the Capital Economics’ Climate and Commodities teams will track and analyse developments in the transition to a greener global economy. The sharp increases in the lifetime costs of wind and solar projects since 2021 …
26th April 2023
After a positive start to the week on the back of China’s strong Q1 GDP data, commodity prices subsequently eased back on expectations of higher interest rates and worries about demand in advanced economies. OPEC+ members may have been left wondering if …
21st April 2023
Commodity prices received a boost from expectations that the Fed is nearing the end of its tightening cycle and the weaker US dollar this week, but we think that it is only a matter of time before the economic slowdown we forecast in developed economies …
14th April 2023
Global sugar prices have surged by over 20% since the start of the year as production estimates in several key producers have been downgraded. We think the supply picture is unlikely to change by much over the next months and will keep prices elevated. …
China’s commodity imports generally rose strongly in March which we think reflects higher demand as a result of the re-opening of the economy. While April data may also be strong, we expect import volumes to soften later in the year as export demand …
13th April 2023
The surprise announcement last weekend by OPEC+ countries that they would make voluntary oil production cuts, even before the OPEC advisory committee met on Monday, pushed oil prices higher by about $5 per barrel. The decision means that the oil market …
6th April 2023
OPEC+ decision sends oil futures curves into steeper backwardation The surprise OPEC+ decision to cut oil production sent oil futures curves into steeper backwardation. This doesn’t necessarily mean that market participants see prices falling from here, …
5th April 2023
The historic drought afflicting Argentina will cause a steeper contraction in GDP than most expect this year and intensify balance of payments strains by reducing export earnings to the tune of 2-3% of GDP. That will make it hard to meet the IMF’s …