Oil and wheat are the only gainers in the commodity market

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The third quarter of 2018 for the commodity markets have become extremely negative, as almost all products except wheat and oil, showed a significant decrease for the second quarter of this year. The main reasons for the fall in the price of commodities was the strengthening of the U.S. dollar against the background of the potential decline in consumption as a result of trade wars and expectations of a slowdown in global growth. Commodity CRB index showed a decline of 3.2% quarter-on-quarter, while in annual terms the growth amounted to 10.4%.
The US dollar in the last quarter continued to strengthen, which has had a negative impact on the precious metals markets. The flow of funds in U.S. treasuries after the fed’s rate hike had put additional pressure on the price of gold and silver. On the COMEX was open a record number of speculative short positions in these metals. However, future expectations for these metals remains positive.
The markets of non-ferrous metals remain under strong influence of trade wars that threaten consumption. Strong negative influence on dynamics of the prices for aluminium in the last quarter had a weakening of sanctions against the company “RUSAL”. The copper market showed a decline as a result of increased expectations of a slowdown in global growth and the prices of zinc and lead fell under the influence of rising demand.
The price of oil in the last quarter continued to increase as a result of supply reduction, but by the end of the 3rd quarter of OPEC+ again increased the supply of oil to the market, partly compensating for dwindling production in several producing countries. In the short term, the oil market experienced a speculative price surges in anticipation of a decline in Iranian supply, but high energy prices, and the escalating trade wars on average reduce the growth rate of oil prices.
Among the grain markets showed a positive trend of price of wheat under the impact of lower export supplies from the EU, as well as a possible drop in exports from Russia in the new season. Other grains and oilseeds were under the strong pressure of changes in trade flows in North and South America, and in Asia against the background of a trade war the US and China.
The fourth quarter of 2018 may be more positive for the precious metals markets, but the nervousness in global trade will negatively affect other commodities. The most interesting trade would natural gas and precious metals.
Oksana Lukicheva
Analyst of commodity markets,
“Opening Broker”