Commodity Prices down in Q1'15

Proshare

Friday, April 10, 2015 9:12 AM / FDC

 

        The Economist Intelligence Unit (EIU) remains pessimistic about the outlook for industrial raw-material prices in 2015

        Fundamentals are set to remain bearish

        The plunge in oil prices is having repercussions across commodities

        A big sell off in copper and loss of investor appetite for holding commodities

        EIU expects the IRM index to contract by 2.6% in 2015

        Index fell by 0.4% in 2014

        Meaning that commodity prices will decline for 4 consecutive years

        For Nigeria it means that export revenue pressure will continue

 

      And imported inflation threats will be muted

      Brent traded at $55.11pb in March, 11.94% below the February peak

      The Saudi/Yemen conflict was not enough to keep prices high

      The E.I.U also expects a sharper decline in the food, feedstuff and beverage index by 13.5%

 

      The price declines are almost entirely a supply side phenomenon

      Large outputs in major cereal and oil-seed producers

      A long-term slow-down in Chinese demand for rice will contribute to weak conditions

 
Commodity Prices down in Q1’15

      The Bloomberg Commodity Index (BCOM) declined by 5.94% in Q1’15 from Q4’14

      Also down by 5.14% in March from February

      Largest quarterly decline seen in WTI, wheat and sugar




Sugar

      Sugar prices are down17.84% in Q1’15 from Q4’14

      Pressure on prices from export competition

      Weaker Brazilian real

      India’s plan to reintroduce export subsidies

Wheat and Corn

      Wheat and corn prices are down 13.25% and 5.24% in March

      Market fundamentals remain bullish due to ample supplies

      Wheat prices may further be affected by Ukraine’s plan to open up its export market

      Corn prices may see short term support due to slower-than-normal corn planting progress

 

Outlook – EIU

      Agricultural prices are expected to fall by 7.1% in 2015

      Due to large stock levels in major markets

      Grains and oilseeds will record the largest price declines of 13% and 15% respectively in 2015

      Industrial raw materials index is expected to contract by 0.4% in 2015

      Fundamentals and financial dynamics to keep downward pressure on oil price

 
Outlook – Deutsche Bank

      Expect US oil production to begin to fall in May

      US dollar poses a risk to global commodity prices

      Agriculture moving into oversold territory

      Broad-based recovery is contingent on adverse weather conditions

 

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