(5.03) Commodity Markets For the first time in three years, U.S. producers are expected to see their borrowing bases decline on a worsening outlook for commodity prices. Global growth stagnation has been accompanied with the rise of commodity prices since the beginning of the year, primarily oil, metal and cereals, and their stabilisation is expected in the medium term. Supply disruptions due to mine closures in Brazil have tightened the seaborne iron ore market and are likely to keep prices up to at least 2021. European data showing factory activity contracted at the fastest pace in nearly six years and lacklustre U.S. figures were fanning fears that weaker global growth will sap demand for commodities. Helped by a weaker Australian dollar in 2018-19 and higher prices for its major commodities, Australia's resources and energy export earnings are expected to hit a new record of A$278 billion. Canada exports many commodities, including oil, so its economy could be hurt by an escalation of trade tensions. Except for oil prices that are influenced by unique geopolitical supply risks, commodity prices are exposed to the slower economies of China and the U.S. in 2019. Except for oil prices that are supported by unique geopolitical supply risks, commodity prices are exposed to the slower economies of China and the U.S. in 2019. With improved energy production and higher commodity prices, commodity exporting countries are expected to see some modest recovery in growth, except in Guyana, where the start of oil production in 2020 will provide a substantial boost to growth. Malaysia's palm oil inventory is expected to hit a surplus of three million tonnes this year as production continues to outpace demands from the global and domestic markets, further denting the rise of Malaysia main commodity export. Due to volatility in commodity prices and uncertainty in emerging markets such as South Africa, most national currencies lost ground against the US dollar in 2018 and are expected to continue depreciating in 2019, except for the Mauritian rupee. Citing stable commodity prices, the ADB lowered its average inflation forecast for developing Asia to 2.5 percent this year from 2.7 percent previously, and it is expected to remain subdued at 2.5 percent in 2020. Global demand for agricultural products is projected to grow by 15% over the coming decade, while agricultural productivity growth is expected to increase slightly faster, causing inflation-adjusted prices of the major agricultural commodities to remain at or below their current levels. Trade in agricultural and fisheries commodities should expand over the coming decade at around 1.3 percent annually, slower than over the past decade, as growth in global import demand is expected to slow. Expect global uranium demand to rise roughly 40% by 2025, a staggering amount for a commodity that saw next to zero demand growth in the past 10 years: The mined supply of uranium will struggle to keep pace amid rising demand and falling secondary supplies. With little chance of real growth in commodity prices this year and possibly higher farm input costs, Canadian farmers will need to properly evaluate the outlook for profitability along with the associated risks. Oil prices have risen 34 percent since the start of the year, amid production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and other producers, and supply disruptions elsewhere. The fallout from tighter liquidity conditions in China, and elsewhere, will continue to be felt well into 2019 in the form of weaker commodity prices and slower growth across the developing world. The trajectory of commodity prices in 2019 will likely have the largest influence on mineral industry financing and exploration activity levels over the coming 12-18 months. As a $4 trillion industry responsible for transporting 80% of the world's energy, commodities and goods, any activity that disrupts global trade will have far reaching consequences. Tightening of supply by the Organisation of Petroleum Exporting Countries (OPEC), coupled with longer-than-anticipated disruptions in Venezuela and a slowdown in US shale oil production could exert upward pressure on oil prices. See full forecast Last updated: 22 October 2019 Hi, Would you like a quick online demo of our service from an experienced member of our team? Yes No
