PRESS ROOM
More tightness expected in commodities
Friday 21st October '22
Inventories of many commodities are significantly below historic average. And the number of commodities in backwardation - where spot prices are higher than futures prices - are at historic highs. Both signal tight supply and demand dynamics. Judging by net speculative positioning and pricing technical, pessimism has set into many commodities. Despite the recessionary fear, this pessimism appears unjustified, when looking at the fundamentals and we may see a short-covering rally in several commodities as those positions unwind. We expect supply of many commodities to continue to tighten. High energy costs are forcing metal smelters to halt operations. The Organization for Petroleum Exporting Countries and its partners (OPEC+) is clearly unsatisfied with recent oil price drops and has started to intervene. The safe passage of grains out of Ukraine isn’t guaranteed beyond November.