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Global Commodity Watch - May 2012

John Baffes's picture

Non-energy commodity prices fell by 0.4 percent in April, led by declines in most metals, on concerns about the global economy. Agriculture prices were flat overall, with strong increases in fats & oils offsetting declines elsewhere. The soybean complex continued to record strong gains on further supply losses in South America. Crude oil prices slid on improving supply conditions, while U.S. natural gas prices continued to plummet due to large oversupply. Fertilizer prices rose sharply on strong demand in the Americas and emerging demand in Asia.

Crude oil prices (World Bank average) fell 3.5 percent in April to $113.7/bbl, and dropped below $106/bbl in early May, on easing supply conditions and bearish economic news. Despite supply disruptions—notably South Sudan, Syria and Yemen—crude availability remains ample and global oil stocks are increasing. Iranian crude exports are declining sharply because of sanctions, and up to 1 mb/d of exports may be eliminated by this summer. However, OPEC production continues to climb, with total liquids output at the highest ever. Iraq production has topped 3 mb/d and exports are expanding through a new offshore loading terminal that will add 0.4-0.5 mb/d of Iraqi exports. Several non-OPEC producers are also raising output, particularly surging U.S. shale-liquids production.

Agricultural prices were unchanged in April, with strong increases in fats and oils prices essentially offsetting declines in most other groups. The largest increase was for tea (up 13 percent) on the seasonal arrival of new teas in India. Soybean meal and soybeans prices rose 10 and 6 percent, respectively, on further supply shortfalls in South America and reduced planting intentions in the U.S. Leading the declines were sorghum prices, down 7 percent, on news of increased U.S. planting intentions. Wheat prices fell 6 percent due to a larger than expected U.S. winter crop and better grain prospects in Australia. Sugar prices declined 6 percent following India's announcement to allow exports of raw sugar. Arabica coffee prices fell 5 percent amid weak demand and substitution to lower-priced robusta beans, and favorable production prospects in Brazil.

Metals and minerals prices fell 1.9 percent in April, with declines in most base metals, on concerns about weakening global demand and high and rising stocks for most metals. The largest decrease was for aluminum on record high stocks and continued concerns about the strong rise in Chinese production. Nickel prices fell 4 percent on rising inventories, slowing demand, and imminent large supply growth. Also declining were silver and gold prices due to lower investment demand. Indonesia banned exports of 14 raw minerals effective May 6th, including copper, lead, nickel, zinc, iron ore, gold and silver. Exceptions will be given for miners that plan to build local processing facilities and add value. Those miners will be taxed 20 percent on ore shipments.

Get detailed analysis and commodities prices datasets: For price data and detailed analysis on commodities price movements in April, click here (pdf).

For price data and forecasts click here.