BPL:Commodity Watch: A cool down or just a plateau?
Posted on Monday, May 16 by Tim Burt in Global Sourcing, Risk Management | Post a Comment
After what was an astonishing few days in commodity markets some sense of normality has returned to markets with many commodity prices stabilising over the past week - even if it's only temporary.
Silver, which led the dramatic declines, fell by 0.77% on the week to $35.01 a troy ounce, while corn, which was also one of the headliners last week, saw its prices decline by 0.53% to $679.00 cents per bushel.
Basic metal prices also rebounded with Zinc leading the way with a price increase of 3.66% up to $2179.00 a tonne, while lead (+3.05%), aluminium (+1.48%) and tin (+2.57%) also rose significantly on the week.
However, volatility remained in the energy markets with brent oil prices fluctuating between $110 and $120 a barrel before settling on $113.83 (+4.31%), whilst heating oil (+3.39%) and crude oil (+2.54%) were also up. Although gas oil (-1.21%), RBOB gasoline (-0.51%) and ethanol prices (-0.75%) were down.
The International Energy Agency this week stated that high crude prices have started to dampen growth in demand and have now forecast that total oil product demand will this year fall by 230,000 barrels a day in the developed world, while in the developing world demand will grow by 1.5m barrels a day. This represents a global growth rate of 1.5%, less than half the 3.3% of 2010.
Analysts however remained optimistic about energy prices for the rest of the year, with Goldman Sachs saying on Friday that they expected prices to rise until the end of the year, while JPMorgan and Barclays Capital also expressed the same sentiment.
Other significant movers over the past week included cocoa (-4.37%), coffee (-6.18%), cotton (-5.62%), random length lumber (-7.83%) and wheat (-3.92%). Heading in the opposite direction were sugar (+4.79%) and orange juice (+4.49%).
It is clear that the fallout from the past few weeks is not over yet and the current period of readjustment after the torrid price spikes of recent months may not be around for long
