Commodities prices back to where they were a year ago: HSBC

HONG KONG — Commodity prices fell for the fourth month in a row in June, with HSBC’s proxy for the IMF Index pointing to a fall of around 4% m-o-m. The weakness was broad-based, with 21 of the 32 commodities HSBC monitors having a lower average price than in May.
“Overall, commodity prices have now fallen nearly 11% over the past four months, unwinding the gains seen over late 2016 and early 2017; the index is now almost exactly where it was a year ago,” HSBC says in a research report written by Paul Bloxham, HSBC Chief Economist, Australia, New Zealand and Global Commodities, and Daniel Smith, HSBC Economist.
“That still leaves overall commodity prices 28% above the January 2016 trough, but for the past year they have done very little,” the report says.
“Due to its high weighting, oil was the biggest drag on the overall index in June, with average oil prices down 7% from May. Brent crude prices fell fairly steadily from US$50 per barrel at the end of May, to a low of US$45 on June 21. Prices then rose to around US$48 by the end of the month.
“The recent weakness in prices, as well as the strong rebound in US shale production, led HSBC's analysts to lower their price assumptions, with an average price of US$56/b expected for 2017 (US$60 previously) rising to US$65/b in 2018 (US$75 previously).
“Meanwhile, the price of natural gas followed a similar pattern to oil, ending the month more or less where it started, but seeing its average price for the month fall 7% below that of May.
“Metals prices were generally weaker once again, with iron ore prices down a further 8% m-o-m in June. Uranium prices fell 7%, while other metals saw more modest falls; 3% for tin and nickel, 2% for aluminium, and 1% for zinc. “
“Copper prices bucked the trend and were 2% higher than in May. Despite generally lower prices over most of June, metals prices rallied towards the end of the month. Metals prices are still mostly up strongly in y-o-y terms.
“Even the price of iron ore, which fell 35% in three months, is 10% higher than it was a year ago.
“Grain prices were generally higher in June, with rice up a further 9%, barley 8%, and wheat up 5%. Meat prices also rose, with poultry holding on to some strong recent gains and pork surging 19% m-o-m, albeit only to 4% y-o-y.
“Sugar and rubber prices have fallen significantly in recent months, giving up their previous gains”  www.hsbc.com   (ATI).