Capital Economics Commodities

Some of our forecasts for commodity prices this year have been blown off course by extreme weather events. Chief Commodities Economist Caroline Bain shares some thoughts on what more frequent adverse weather means for our commodity analysis going forward: bit.ly/3khF2Mg

While we suspect that #OPEC's membership may expand, we think that its ability to influence prices will fall over time and that #oil prices in real terms will decline steadily over the coming decades. #OOTT bit.ly/2UzW4fH

The government in China has stepped up measures to tackle pollution and excess capacity in the domestic #steel sector recently. This adds weight to our view that steel production and the price of #iron ore will fall back over the next couple of years. bit.ly/3k4Dm8U

While we expect #oil production in the US to pick up slightly over the next year or so, we doubt it will return to pre-pandemic levels anytime soon. This should keep the #Brent-#WTI spread narrow but is unlikely to prevent oil prices from falling. bit.ly/3CGVVIG #OOTT

The #OPEC+ agreement, signed Sunday, should help support #oil prices. We expect Brent crude to trade close to its current level over the next 6 months. But we expect it to fall into the $60-70pb range in 2022 as more supply comes onto the market. #OOTT bit.ly/3kFsb8h

We expect the price of #gold to fall further over the next couple of years as long-dated US real yields climb, reaching $1,550 per ounce by end-2022. bit.ly/3dvQS2T

Higher exchange #stocks of base #metals look to be due to other factors, rather than a surplus in the market. We think that supply of most metals will pick up soon, which should boost stocks further and weigh on prices. bit.ly/3hkXSk5

Strong industrial demand and constrained domestic supply will support US natural #gas prices throughout the remainder of this year. However, we expect that the average price will fall in 2022, in large part because of higher production. #HenryHub #heatwave bit.ly/3y8KTca

China’s imports of industrial #commodities, particularly #iron ore and unwrought #copper, eased back in May. We expect import volumes of both these commodities to fall further in the coming months as policy support continues to be gradually withdrawn. bit.ly/3pqViN4

We think that the prices of #wheat, #corn and #soybeans will decline over the next six months owing to a rebound in global supply and slower demand growth in China. #ags bit.ly/3ulG50I

Limited domestic supply, expensive imports and strong growth in demand have fuelled the rally in US #steel prices. But with supply set to improve, at a time of softer growth in demand, prices should fall. bit.ly/3fq9tic

While China’s announcement that it will crack down on speculation & market irregularities has taken some of the froth out of the iron ore market, we think the price will ultimately be driven even lower by less favourable fundamentals this year bit.ly/3yIf36S

We think that strong demand in Asia and slowing supply growth in China will keep the price of Newcastle #coal elevated for the rest of this year bit.ly/2REL9jB

Although the disruption to auto production from #semiconductor #microchip shortages poses a downside risk to our #PGM forecasts, we still expect the #palladium price to remain elevated while the #platinum price drops back over the course of this year bit.ly/3vrZTkj

We expect #Iran's #oil output to rise this year, irrespective of whether the nuclear deal is revived. However, a failure to reach a deal would probably lead to a higher risk premium in the oil price. #OOTT bit.ly/2QsT9Dv

We suspect that the Chinese government's focus on food security in its latest Five-Year Plan will lead to lower global agricultural prices bit.ly/3w9V1Ar

We think that the absence of pipeline capacity constraints, a strong recovery in US oil demand, and increased output from OPEC+ members will all help to ensure that the Brent-WTI price spread remains narrow over at least the next year or so. bit.ly/3eqQN1a

Today's commodity import data from China chimes with our view that imports of industrial commodities into China will come off the boil as economic growth there slows. This should be a factor dragging industrial metals prices lower by year-end. bit.ly/3f3tDwL

Over the past week we have published detailed forecasts forecasts for energy, metals & agricultural commodities in our quarterly Outlooks. In short, we expect most commodity prices to be falling again by end-2021. Clients can access them via our website: bit.ly/3b1Hz9G

Recent data have highlighted the strength of the rebound in physical demand for #gold, especially in India and China. But we don’t think this poses much of a risk to our forecast for the gold price to fall this year. bit.ly/2QAn7pn