United Nations Conference on Trade and Development · 2019-04-15 · United Nations Conference on...

United Nations Conference on Trade and Development

11th MULTI-YEAR EXPERT MEETING ON COMMODITIES AND DEVELOPMENT

15-16 April 2019, Geneva

Commodity markets: Recent trends and outlook

By

Janvier D. Nkurunziza

Commodities Branch, UNCTAD

The views expressed are those of the author and do not necessarily reflect the views of UNCTAD.

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Commodity markets:

Recent trends and outlook

Multi-year Expert Meeting on Commodities and Development

15 - 16 April 2019, Geneva

Janvier D. Nkurunziza

Commodities Branch, UNCTAD

Background….

Volume Index and volume growth rate of merchandise imports

Recent developments in global commodity markets

The big picture: 2 out of 3 developing countries are

commodity-dependent

UNCTAD Commodity price index - NEW

ALL FOOD

- Food

Wheat

Maize

Rice

Sugar

Bovine meat

Bananas

Pepper

Soybean meal

Crustaceans*

Fish*

- Tropical beverages

Coffee

Cocoa beans

Tea

- Vegetable oilseeds and oils

Soybeans

Soybean oil

Sunflower oil

Groundnut oil

Copra

Coconut oil

Palm kernel oil

Palm oil

AGRICULTURAL RAW MATERIALS

Fish meal fodder*

Tobacco

Cotton

Wool

Jute

Hides and skins

Tropical logs

Tropical sawnwood*

Plywood*

Rubber

MINERALS, ORES AND METALS

- Minerals, ores and non-precious metals*

Phosphate rock

Manganese ore

Iron ore

Aluminium

Copper

Nickel

Lead

Zinc

Tin

Tungsten ore

- Precious metals*

Gold*

Silver*

Platinum*Fuels*

Natural gas*

Coal*

Crude petroleum*

Price trends….

The big picture – All commodity groups


UNCTAD Free market commodity price index in 2018

• Commodity prices trended upwards

during first 3 quarters of 2018;

• January to September 2018: Index

increased by 7%

• Last quarter of 2018: downward

trend driven mainly by energy

commodities

• Overall the index fell by 10% in

2018.


Commodity price indices show a mixed picture in 2018

• Vegetable oilseeds and oils: from

January to September index

declined by 11.7%

• Food price index: from January to

September decreased by 8.7%, but

increased by 4.2% in last quarter

• Tropical beverages: decreased by

13.2% from January to September

• Minerals, Ores and Metals: trended

downwards during the first three

quarters


99.72 99.24101.12 100.35 101.16

97.3

93.07 92.01 91.05

94.41 93.3994.88

96.82

89.59 90.23 90.81 91.08 91.03

86.85

83.99

79.7377.77

84 84.09

79.0679.86

104.09

107.42108.8

110.04

107.17

100.04

96.04 95.65

91.93 92.9191.77 92.77

94.69

124.79 124.84

121.56 121.36 120.83 120.74

114.39112.15 111.26

114.1 113.76 114.15116.48

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130

Jan

. 20

18

Feb

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Mar

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Ap

r. 2

01

8

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18

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e 2

01

8

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Au

g. 2

01

8

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Oct

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No

v. 2

01

8

Dec

. 20

18

Jan

. 20

19

Food Tropical beverages

Vegetable oilseeds and oils Minerals, ores and metals

Commodity prices show a mixed picture in 2018Monthly price, January 2018 vs December 2018 (% change)


-50 -40 -30 -20 -10 0 10 20 30

Phosphate rock

Cocoa

Wheat

Maize

Groundnut oil

Soybeans

Beef

Rice

Sugar

Sunflower oil

Soybean oil

Rubber

Crude oil, Brent

Coffee

Zinc

Tea

Palm oil

Coconut oil

Commodity price developments 2017 vs. 2018Monthly price, December 2017 vs. December 2018 (% change)


-50 -40 -30 -20 -10 0 10 20 30

Phosphate rock

Cocoa

Wheat

Maize

Groundnut oil

Soybeans

Beef

Rice

Sugar

Sunflower oil

Soybean oil

Rubber

Crude oil, Brent

Coffee

Zinc

Tea

Palm oil

Coconut oil

Food and agricultural commodity price indices


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Food Tropical beverages Vegetable oilseeds and oils Agricultural raw materials

Prices of most food commodities dropped in 2018

• Record output in India & Thailand exerted downward pressure on sugar prices

from January to August;

– Prices fell to 11.08 cents/lb in August 2018, the lowest since august 2015

– Prices increased in last quarter to $12.65 cents/lb due to adverse weather

• Price of rice followed a volatile downward trend largely due to fluctuating

demand.

– From January to December 2018 price fell by 8.6%; but this was a marginal rise from

previous year

– Output for 2018/19 projected higher than demand; price increase unlikely.


Prices of most food commodities dropped in 2018 (cont’d)

• Maize:

– rising prices in first 5 months due to strong demand and adverse weather conditions in

growing regions (e.g. Argentina)

– return to favourable weather in the latter part of the year helped to stabilise prices.

• Wheat:

– prices volatile: increased from $227.3/mt in January to $245.3/mt in March due to

adverse weather and strong global demand

– fluctuated upwards and downwards until end of year to settle at $240.3/mt in December

– A tight supply outlook is forecast in 2019 likely to exerted upward pressure on prices

Vegetable Oilseeds and Oils

• Prices of all individual oilseeds and oils trended downwards in 2018 except for

groundnut oil.

– Groundnut oil (11.0%)

– Cottonseed oil (-28.4%)

– Palm kernel oil (-41.6%)

– Coconut oil (-42.8%)

– Palm oil (-23.9%)

– Soybean oil (16.3%)

– Sunflower oil (-12.0%)

• Forecast: abundant supply for major oilseeds, so prices likely to remain low.


Tropical beverages• Tea:

– price declined from $2.95/kg in January to $2.29/kg in December

– favourable weather conditions in growing regions boosted production

• Cocoa:

– price increased from 88.5 cents/lb in January to 120.7 cents/lb in May

– then downwards trend until October before rising slightly to end the year at 100.2 cents/lb

– high prices driven by production levels falling in Côte d’Ivoire and Ghana.

– Negative price developments fuelled by improved weather conditions and higher arrivals at ports of the cocoa-producing regions

• Coffee:

– composite price indicator trended downwards

– largely due to increased harvests for all coffee groups

– Forecasts of healthy production for 2018/19 driven largely by recovery in Brazil


Agricultural raw materials

• Rubber:

– prices increased from 172.2 cents/kg in January to $175.8 in March

– Mainly due to agreement by major producers to reduce exports by 350,000 metric tons

– prices returned to a downward trend after agreement elapsed; ended the year down by 17%

– Demand growth expected to outpace production increases, hence mild price increases

expected

• Cotton:

– prices flat in 2018, fluctuating within a band of $2.01/kg in January to $1.90/kg in

December

– consumption forecast to outpace production in 2018/19 but prices expected to remain

stable due to high stocks


Minerals, ores and metals price index (April 2010 - December 2018)

• Price Index fell by 10.8% in the first

three quarters of 2018 before

rising in the last quarter by 2.6%

• Overall, the index declined by 8.5%

in 2018


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Ap

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Au

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Selected minerals, ores and metals prices (April 2000 to Dec 2018)

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100

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250

0

10000

20000

30000

40000

50000

60000

Copper ($/mt) Nickel ($/mt) Minerals, ores and metals index (right axis)

Zinc (cents/lb) - right axis Iron ore, cfr spot ($/dmt) - right axis

Recent prices of selected minerals ores and metals

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Copper ($/mt) Nickel ($/mt) Minerals, ores and metals index (right axis) Zinc (cents/lb) - right axis Iron ore, cfr spot ($/dmt) - right axis

Minerals, ores and metals

• Nickel: price dropped by 15.8% between June and December 2018– Supply chain disruptions due to growing concerns about trade tensions between

US and China

– Consumption forecast to exceed production in 2019 leading to stock reduction

• Iron ore: volatile fluctuating between $76.3 and $64.6/dmt. Why?– concerns over oversupply led to price drop of 9.1% from January to December

– prices expected to remain low due to favorable supply conditions


Minerals, ores and metals (cont’d)

• Copper: price declined by 14% from January to December 2018

– driven in part by trade tensions between US and China and resulting in a larger

market surplus

– rising future demand likely to tighten market and exert upward pressure on prices

• Zinc prices dropped by 22.3%

– largely due to oversupply and rising inventories

– prices forecast to remain flat in 2019 due to tightening fundamentals

Energy prices - Crude oil (Brent), Australian coal, natural gas index


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Dec.2000

Aug.2001

Apr.2002

Dec.2002

Aug.2003

Apr.2004

Dec.2004

Aug.2005

Apr.2006

Dec.2006

Aug.2007

Apr.2008

Dec.2008

Aug.2009

Apr.2010

Dec.2010

Aug.2011

Apr.2012

Dec.2012

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Apr.2014

Dec.2014

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Apr.2016

Dec.2016

Aug.2017

Apr.2018

Dec.2018

Crude oil, UK Brent, light blend API 38°, spot price, FOB UK ports ($/barrel) Natural gas, index, Europe, United States and Japan (2010=100) - right axis

Australian Coal ($/mt)

Energy - Crude oil (Brent), coal and natural gas prices, April 2016-December 2018

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Crude oil, UK Brent, light blend API 38°, spot price, FOB UK ports ($/barrel)

Australian Coal ($/mt)

Natural gas, index, Europe, United States and Japan (2010=100) - right axis

Crude oil

• Volatility in crude oil markets continued in 2018:– Relaxation of constraints on crude oil production by OPEC+ helped to cool down prices

between June and August 2018

– supply concerns from the Middle East and Venezuela exerted upward pressure on prices

(currently back at $70 per barrel)

– Price rose by 16.6% from January to peak at $80.5 $/bbl in October due to tightening

market, but fell to $56.5 in December as OPEC+ raised production

– The forecast is that prices will stabilize in 2019 due to greater production constraints

Natural gas in 2018• Markets regionalized due to transport and different contractual arrangements

• Henry Hub: $4.14 /million btu in November; highest level since November 2014– high volatility: prices fluctuated between $2.67 and $4.14/million btu due to increased

production and dwindling stocks

– strengthening demand from LNG exporters expected to exert upward pressure 2019

• European market: $9.5/million btu in September 2018, highest since January 2015– high volatility: high prices due to late winter spell, demand for LNG in Asian market, heatwave

in most part of northern hemisphere and maintenance of pipelines and facilities

– entry of US into LNG market to exert downward pressure on European gas prices in 2019

• Asian LNG market peaked at $12/million btu in December, the highest level since April 2015:– steady rise in 2018 from $9.3 million btu in January to $12/million btu at the end of 2018

– driven in part by rising imports into China

Coal• Coal primary fuel for electricity generation:

– use in power stations accounted for third of global energy related CO2 emissions in 2018

– demand declining in Europe and North America but growing across much of Asia due to its

affordability and availability, thus offsetting declines in other regions.

– Global demand expected to rise for second consecutive year in 2018

• Coal prices volatile in 2018:

– rose from $106.5 per metric ton in January to $119.6 in July but down to $101.3 in

December

– increase driven by robust demand form utilities in Asia, particularly China for industrial

and residential cooling

• 2019: higher growth in production than consumption; downward pressure on

prices

Renewable energyAnnual growth rates of renewable energy consumption by type, 2000-2017

• Recorded the highest growth rate of any energy source in 2017 (approx. 25% of global energy demand growth)

• IEA forecasts share of renewables to reach 12.4% of global electricity generation in 2023

• forecast to meet more than 70% of global electricity generation growth by 2023

• led by solar PV followed by wind, hydro and bioenergy


-20

0

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Geothermal, biomass and other Wind Solar Hydro

Conclusion….

Summary and outlook

• The general trend showed commodity prices falling in 2018

• Energy prices increased until late in the year; coal consumption rising in Asia

• Renewable energy growth continues dominated by solar and wind; but the growth rate has slowed relative to its peak level in 2011

• Continuing trade tensions between US and China likely to dampen prices of metals in 2019


Thank you.

Contact: [email protected]

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