Non-energy commodity prices fell by 0.4 percent in June, although there were both large declines (coconut oil and tin) and sharp gains (urea fertilizer and sugar). Crude oil prices fell on the IEA release of emergency stocks. Over the first half of 2011, non-energy commodity prices rose 3 percent, with fertilizer prices surging 26 percent on strong demand; agriculture prices rose 3 percent, led by an 11 percent gain in grains, while metal prices were just 1 percent higher, with silver up 22 percent. Oil prices climbed 18 percent and LNG 26 percent.
Crude oil prices fell 2.1 percent in June, averaging $105.9/bbl. However the price for the international marker Brent was $113.8/bbl while WTI was just $96.3/bbl due to the continuing supply bottleneck at Cushing OK (in early July, the Brent-WTI price spread widened to more than $21/bbl). Oil prices rose briefly following OPEC’s meeting June 8th when the group failed to agree on a production increase. However prices fell sharply following the IEA announcement June 23rd of a 60 million barrels release from strategic stocks for an initial 30 days. Half will be physical sales from the U.S. Strategic Petroleum Reserve. A sizeable portion of the remaining 30 mb will be in the form of relaxing stock-holding requirements in Japan and Europe, and thus will have minimal immediate impact on the market. As such, oil prices in early July have risen back to levels before the IEA release. In June, OPEC production increased 0.8 mb/d, the first sizeable gain since the loss of 1.5 mb/d of Libyan crude.
Agriculture prices declined 0.7 percent in June on improved supply prospects for some commodities. Coconut and palmkernel oils plunged 14 and 10 percent, respectively, due to large gains in production, while cotton prices dropped 10 percent on weak demand and substitution to cheaper synthetic fibers in Asia. Wheat prices fell 8 percent following Russia’s announced plan to end its grain export ban July 1st, and the Ukraine’s move to lift export quotas. Coffee arabica prices fell 6 percent on improved crop prospects in Brazil and Colombia, while rubber prices decreased 4 percent on substitution to synthetic rubber. Partly offsetting these declines, sugar prices surged 15 percent on reports that Brazil’s production will be lower than expected. Logs (Malaysia) prices rose 8 percent on strong Asian demand and rebuilding in Japan.
Metals and minerals prices fell 1.2 percent in June, on continued concerns about slowing global demand. Tin prices dropped 11 percent due to a sharp increase in production following a season of heavy rains. Nickel prices fell 7 percent due to weakening stainless steel demand, an increase in China’s nickel pig iron production, and expected ramp-up of several new nickel mine projects. Iron ore prices slid 3 percent due to a slowing of steel production growth, particularly in Europe and China. Partly offsetting these decreases were gains in lead-zinc prices of 3-4 percent. Lead prices were supported by uncertainty surrounding the restart of the Magellan mine in Australia, while zinc prices were boosted as exchange inventories tied up in warehouse-financing deals tightened supply.
Get detailed analysis and commodities prices datasets: For price data and detailed analysis on commodities price movements in June, click here (pdf).
For price data and forecasts click here.