Recession fears scare commodities again & World Banks forecasts major drop
Recession fears scare commodities again & World Banks forecasts major drop
The Commodity Report #101
World Banks forecasts major commodity price drop
In its latest Commodity Markets Outlook report the World Bank said last week that global commodity prices are expected to decline this year at the fastest pace since the onset of COVID-19, clouding the growth prospects of almost two-thirds of developing economies that depend on commodity exports.
The agency expects prices to fall 21% compared to last year during 2023. For 2024 the World Bank expects prices to remain stable. Energy is projected to fall by 26%, Agricultural to fall by 7%, Raw Materials by 6%, Fertilizers by 37%, Base Metals by 9% and Precious Metals are actually projected to rise by 6%.
The World Bank also expects commodity prices to fall during 2024 but at a much slower pace.
Meanwhile, I would like to add that long-term forecasts are pretty bad leading indications. We tie our analysis at Kuemmerle Research to economic momentum and special situations which tends to be much more reliable.
Here are a few price projections of the report - compared to the actual price declines so far this year:
Crude Oil - 84$/bbl (now 77$)
Henry Hub Natgas - 2,7$/mmbtu (now 2,55$)
Soybeans - 590$/mt (now 520$)
Corn - 270$/mt (now 229$)
Gold 1.900$/toz (now 2.000$)
Copper 8.500$/mt (now 8.500$)
You also can find the entire report here.
The FED got pranked - big time
Fed Chair Powell was tricked by Russian pranksters who were posing as Ukrainian President Zelenskiy, according to a video shown on Russian TV last week. In the prank call, Powell admitted that a US recession is likely & two more 25bps hikes are coming. “This is what it takes to get inflation down”, Powell said.
I guess a position as chief press officer will soon become available at the US central bank. You can find the video via the link below:
https://twitter.com/Stephen_Geiger/status/1651569749703249923?s=20
Shipping halted again - because of floods
All barge traffic will be halted across a wide swath of the Upper Mississippi River for weeks, the USDA said last week, as record winter snowfall in the upper Midwest is now melting and flooding into waterways. The closures will force grain and fertilizer shippers to find alternative, potentially more costly, transportation by truck or rail, freight experts said.
The river is moving some 60% of American grain exports. Just last fall, drought plagued the lower and middle Mississippi River valley, sending river levels plunging to historic lows, halting barge shipments.
Now, all locks and dams near New Boston, Illinois will be closed for the next three weeks, and no freight is being accepted along the Twin Cities and mid-Mississippi portions of the river, USDA said in a weekly transportation report.
Such closures are currently pushing down barge freight rates - because there won’t be any demand for these routers over the next weeks
This week look out for the following:
ISM Manufacturing PMI on Monday
JOLTS Job Openings on Tuesday
ISM Services PMI on Wednesday as well as the FOMC meeting (25bps hike expected)
Job Market Report on Friday
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Till next Monday, Lukas
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