MONTHLY COMMODITY UPDATE:
MARKET SCENARIO
S&P GSCI Commodity Index
The S&P GSCI rose for a fourth consecutive
3,000.00
month, by 1.6% in July, as the main positive
catalysts of 2021 remained in play. Many 2,500.00
individual commodities constrained by supply 2,000.00
chain bottlenecks and disruptions continued 1,500.00
to be in deficit around the world. Half of the 1,000.00
U.S. experienced drought conditions last 500.00
month, compared to 25% this time last year. 0.00
Reopening and reflationary demand
1/14/2021
1/27/2021
2/19/2021
3/3/2021
3/15/2021
3/25/2021
4/7/2021
4/19/2021
4/29/2021
5/11/2021
5/21/2021
6/15/2021
6/25/2021
7/20/2021
7/30/2021
1/4/2021
2/8/2021
6/3/2021
7/8/2021
continued to pick up. Inflation readings were
again released higher than expected.
Everyone has a story about something being
more expensive than it was a year ago. The
Fed maintained its dovish supportive posture
that inflation is transitory. A concern on Source: Bloomberg **The S&P GSCI (formerly the Goldman Sachs
market participants’ minds was how Commodity Index) is a world-production weighted index that is based on the
disruptive the spread of the Delta variant of average quantity of production of each commodity in the index, over the last
COVID-19 might get and if it could cool off five years of available data.
the outstanding YTD performance of
commodities.
Take from excel
Source: Bloomberg
Energy Sector Metal Sector
The S&P GSCI Energy was up 1.76% MTD The S&P GSCI Precious Metals was up 2.01% MTD and
and 54.44% YTD. down 4.02%YTD. The S&P GSCI Industrial Metals was
up 3.66% MTD and 24.92%YTD in July.
Within Energy, the S&P GSCI Unleaded
Gasoline rose 4.54%, beating out heating oil
as the top performer in the petroleum The S&P GSCI Nickel led the way for the metals,
complex. Summer driving demand in the rising 7.34% on the month. Mostly used to create
northern hemisphere continued to be one of stainless steel, Nickel is also used extensively in
the key drivers for gasoline. The S&P GSCI electric vehicles. Most electric vehicle metals
Natural Gas broke higher by over 7.71% in edged higher in July, as new competitors to Tesla
July. The U.S. Energy Information (TSLA) drove enthusiasm in the space.
Administration reported that Natural Gas
makes up 40% of annual U.S. electrical Preorders for new electric vehicles exploded, with
generation. many people willing to wait to own a new electric
vehicle as opposed to paying current inflated used
It is a key commodity to watch in the global car prices. This helped to push the S&P GSCI
energy transition, as it is viewed as a less Copper up 3.59% for the month. Four times as
carbon-intensive commodity than other, much copper is needed in the average electric
higher emitting ones. Another interesting vehicle as is needed in the average internal
note from the report showed renewables combustion engine vehicle.
now make up 21%, beating out nuclear and
coal-based generation for the first time ever. Copper was also influenced from the supply side
The green transition continues to be one of with the potential for a strike coming as labor talks
the key thematic stories inspiring commodity broke down at BHP’s (BHP) Escondida copper
price action. mine in Chile, the world’s largest copper mine.
Agriculture Sector: The median analyst forecasts for the month of July are as follows:
The S&P GSCI Agriculture was down 2.10% MTD and
10.92% YTD.
Take from excel
Source: Commodity forecasts are made by the analysts of different institutions i.e.
Across Agriculture & Livestock, the Softs stood Goldman Sachs, ANZ Banking Group, JP Morgan, Citi Group, RBC Capital etc. Median
forecast value of these commodities has been polled by Bloomberg. Data is availed
out. The S&P GSCI Coffee sprinted past the through Bloomberg Professional Services.
rest, rising 12.04% due to extreme frost
conditions, erasing 10% of Brazil’s crop
production for the year. Brazil is the number one
coffee producer in the world, with a 40% share
of global output, double that of the next highest
producer.
The S&P GSCI Corn fell the most, down 8.72%
as the highly liquid CME July contract expired,
with traders taking profit or moving exposure to
the December contract. The S&P GSCI Lean
Hogs rose another 1.20% in July, bringing the
YTD performance to an impressive 29.24%. No
matter if the pandemic gets worse or tapers off,
everyone still wants to bring home the bacon.
Local Market Scenario:
The prices of daily essentials – especially vegetables –
have gone up in kitchen markets across Dhaka amid the
tough lockdown introduced by the government to curb
Covid-19 infections. Despite having no logical reason
for suddenly hiking the prices, traders blamed the
inclement weather and supply shortage for causing the
rates to rise. Dhaka's Karwan Bazar witnessed
comparatively fewer customers due to the rain and
lockdown. Majority of the customers wore masks while
shopping for essentials, but most of the traders did not.
During the spot visit it was found that the Karwan bazar
had no shortage of essential goods, and the market had
adequate supply of fish, meat, rice and vegetables.
Meanwhile, the prices of ginger and garlic have shot up
by Tk20 and Tk10 per kg, in that order, in a week’s time.
The retail price of onions increased by Tk10 per kg in
shops across Hatirpool, Moghbazar, Ambagan and other
areas. Most vendors are selling local onions at Tk52-
Tk55 per kg, but the wholesale price is Tk42 per kg.
Traders also mentioned that the sale of beef has come
down to one-third of the usual demand.
Best Performing Commodities
Source: Bloomberg
Worst Performing Commodities
Source: Bloomberg
