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Global biofuel production unlikely to ramp up anytime soon … … as governments instead prioritise EVs as the future of green transport. As such, elevated food prices shouldn’t be exacerbated by biofuels competing for crops. Global food prices are at …
28th November 2022
There have been a few developments this week that have exacerbated downside risks to our current commodity price forecasts. First, new COVID-19 cases continued to surge to record highs in China, increasing the possibility of harsh widespread lockdowns . …
25th November 2022
Most prices fell this week as soaring COVID-19 cases in China raised concerns about the country’s commodity demand. Given the negative impact of COVID-related lockdowns on travel, it is no surprise that there was particular weakness in the price of …
18th November 2022
The negative correlation between the US dollar and the price of oil has reasserted itself in recent months, and we think it will persist as the looming global recession pushes the dollar higher and oil price lower. Although the price of oil hasn’t risen …
16th November 2022
OPEC supply drops but further falls to come OPEC’s monthly report for October showed a sharp drop in the group’s production, and further falls are likely if members are to abide by their new quotas from November. The OPEC Monthly Oil Market Report for …
14th November 2022
We think the combination of subdued domestic activity and an economic downturn in most major economies will hurt demand for Chinese economic output in the coming months, prompting lower production and therefore import volumes of agricultural commodities. …
Commodity prices surged late in the week on the back of a slump in the US dollar, a fall in US real yields and some easing of COVID-related restrictions in China. However, we doubt that this heralds the start of a renewed upturn in prices. The …
11th November 2022
As the global economy enters recession, the outlook for natural rubber (NR) demand appears bleak. What’s more, stocks are already high. We expect prices to fall further in the near term, before some recovery in late 2023 on hopes of monetary easing and a …
China’s latest trade figures point to weak commodity demand both domestically and globally. Given that we don’t expect the slowdown in global economic growth to trough until early next year, we think commodity demand will remain subdued for a while …
7th November 2022
Most commodity prices rallied on Friday as rumours circulated that China was considering a relaxation of its zero-COVID policy. However, in the absence of any official statements to that effect and the relatively low levels of vaccination, we are …
4th November 2022
Russia’s decision to withdraw from the Black Sea Grain Initiative will exacerbate sky-high prices and tight global supply, and adds to the likelihood that prices hover around historical highs for the next few months. To recap, the Kremlin announced at the …
1st November 2022
China’s official and Caixin October manufacturing PMIs diverged, but the crux of the matter is that both are painting a picture of weak industrial demand. With the services sector also struggling due to the zero-COVID policy, China’s consumption of both …
Overview – Despite the onset of a global recession, we think that energy prices will remain historically high in 2023 owing to severe supply constraints. The next round of EU sanctions on Russia’s oil and product exports, coupled with the output quota cut …
31st October 2022
The outlook for commodity prices has rarely felt more complex: while a looming global recession is set to drag on demand, the ongoing war in Ukraine is likely to mean some markets will remain jumpy over supply concerns. What will this all mean for prices …
Most commodity prices tracked the US dollar this week, falling sharply at the start of the week before staging a partial recovery in the latter half. Further dollar appreciation is likely given that the Fed looks set to raise its target rate by a chunky …
28th October 2022
The big story this week has been the roughly 20% week-on-week fall in the European natural gas price , as mild autumn weather has combined with weak economic activity and the still-high gas price to drag demand lower than usual for the time of the year. …
21st October 2022
Whilst we think coffee prices could have further to fall due to a strong US dollar, heightened investor risk aversion and the global economic downturn, constrained supply should put a floor under prices in 2023. Since the beginning of last year, coffee …
19th October 2022
This week, commodity prices continued to be caught in the middle of an ongoing tug of war between tight supply and deteriorating demand. We ultimately expect that to play out in two different ways over the rest of this year. On the one hand, the deficit …
14th October 2022
Central banks have the tools to deal with liquidity crises arising from rising interest rates and falling asset prices. Instead, the bigger threat is that higher interest rates produce large and simultaneous falls in asset prices that threaten the …
11th October 2022
Crude oil prices rose by around 10% this week as OPEC+ announced a 2m bpd cut to its production quota, which all but guarantees that the market will be in a deficit in Q4. Accordingly, we are sticking to our forecast that the oil price (Brent) will be …
7th October 2022
The US dollar completed a round trip this week, continuing its relentless rise against most currencies early in the week, but then started to fall back from Wednesday afternoon and is now a touch lower than where it started. Predictably, this weighed on …
30th September 2022
Industrial metals prices rose following the release of the latest survey data on China’s manufacturing sector. But the average of the headline PMIs continued to decline, as did the average of the forward-looking export order PMIs. This suggests to us, at …
We now expect lower supply of grains over the coming months as the Russia-Ukraine war continues to reduce Black Sea exports and extreme weather conditions mean global stocks have been drawn down. We have therefore revised up our end-year price forecasts, …
29th September 2022
Drop-In: Spotlight – Economic fracturing, commodities and climate change …
Most commodity prices plunged this week on the back of monetary tightening by many major central banks, including the Fed, and an appreciation of the US dollar. There is still considerable uncertainty about the scale of the global economic downturn, but …
23rd September 2022
Most commodity prices have struggled to make gains since the US August CPI data were published on Tuesday. The unexpectedly strong reading prompted a rise in Treasury yields and US dollar appreciation, both of which are negatively correlated with …
16th September 2022
Overview – Energy prices have been falling recently as concerns about weaker demand took centre-stage, but we expect constrained supply to put a floor under prices in the coming months. By contrast, we expect industrial metals prices to fall further given …
14th September 2022
Energy markets took centre stage this week as demand concerns outweighed supply concerns, dragging prices down. Even the decision by OPEC+ on Monday to cut oil output quotas for October by 100,000 bpd failed to prevent the Brent crude oil price sliding …
9th September 2022
We don’t think Europe will be forced to widely ration natural gas this winter because the sky-high price should attract sufficient LNG from abroad to replace reduced imports from Russia, whilst also weighing on demand. However, we do see a few risk …
8th September 2022
Commodity import volumes generally held up well in August, with the exception of crude oil imports. As long as China continues with pandemic-related lockdowns, oil demand is likely to remain weak. China’s export growth came off the boil in August, falling …
7th September 2022
OPEC+ announced a 100,000-barrel per day cut to production in October at its regular monthly meeting today. The cut is not a complete surprise as there have been mutterings for a few weeks, notably from the Saudi energy minister, Abdulaziz bin Salman al …
5th September 2022
Growing fears about demand hit all commodity groups hard this week as China tightened restrictions in response to renewed virus outbreaks. Energy prices took a big leg down from their highs reached last week , particularly natural gas, despite gas flows …
2nd September 2022
The latest manufacturing PMIs out of China and emerging Asia point to a worsening demand outlook for commodities, but especially industrial metals . This adds weight to our view that industrial metals prices could fall further, although high production …
1st September 2022
We’ve raised our near-term natural gas and coal price forecasts across the board this week to account for the recent slump in Russian natural gas exports to Europe, the likelihood that those exports will remain low, and the knock-on effect that higher gas …
26th August 2022
We have revised up our forecasts of the European natural gas price due to the scale of Russia’s supply cuts and the likelihood that these are permanent. Prices should ease back in 2023 as Europe imports more LNG and demand falls, but we think they will …
24th August 2022
It was another week of soaring natural gas prices as LNG demand from Asia appears to have picked up and the energy crisis in Europe deepens by the day . Ultra-dry and hot weather across Europe is creating problems with Norway’s hydropower and France’s …
19th August 2022
This week the prices of most commodities got a boost as investors pared back expectations for rate hikes in the US , following lower than expected inflation data. That said, we still expect a further small rise in the US 10-year Treasury yield by the end …
12th August 2022
Deteriorating global economic growth over the coming quarters will weigh on industrial demand for cotton, natural rubber and lumber. That said, high oil prices will offer some support to cotton and natural rubber prices, and our expectation for rate cuts …
10th August 2022
Commodity import volumes remained lacklustre in July , consistent with subdued activity in heavy industry and construction. We think import growth should tick up in the coming months in response to higher infrastructure spending and a modest pick-up in …
8th August 2022
In a week of relative financial market calm, there was a pause in the large, sentiment-driven swings that have characterised most commodity prices in recent weeks . Instead, prices seemed to take direction from more fundamental drivers. That said, the …
5th August 2022
Having fallen sharply in Q2, we think that the gold price is now close to a cyclical trough. What’s more, the price should revive a little in 2023 as markets factor in the prospect of US monetary tightening . We always expected the price of gold to fall …
3rd August 2022
China’s PMIs fell in July, weighed down by soft export orders. However, we think that China’s economy troughed in H1 2022, and that a modest pick-up in H2 should give some support to commodities prices . China’s official and Caixin manufacturing PMIs …
1st August 2022
The prices of most commodities across energy, metals and agriculturals rose this week. The common driver was investors dialling back their expectations of the aggressiveness of US monetary policy tightening , after data showed GDP contracted for a second …
29th July 2022
Overview – While non-energy commodities prices may fall a little further, we think the big move down in those prices is now behind us. Admittedly, the demand outlook has undeniably deteriorated in recent months, but many of the supply risks that prompted …
28th July 2022
The news today that Gazprom will further reduce its natural gas supply to Europe increases the likelihood of recessions in the euro-zone, UK and parts of Emerging Europe. It also supports our view that inflation pressures will be relatively persistent in …
26th July 2022
It was a more positive week for prices, in large part owing to some softness in the US dollar . Otherwise, the news was not particularly positive for prices given the ECB’s surprise decision to hike its policy rate by 50bp (having signalled 25bp), …
22nd July 2022
Although we doubt that they will fare quite as badly as they have in recent weeks, we still expect the energy and materials sectors of global stock markets to underperform over the next couple of years. Worries that high inflation, and the large interest …
19th July 2022
Most commodity prices fell this week as global monetary tightening and fears about economic growth intensified . The high June inflation reading in the US nails on another large rate hike at the FOMC’s meeting in July. And central banks in Canada and …
15th July 2022
Commodity import volumes were generally weak in June . We think some of this reflects the lingering impact of lockdowns on demand, but it also points to subdued activity in heavy industry and construction. June may prove to be a low point for commodity …
13th July 2022
