Subscribe here to get our market updates sent straight to your inbox

line 3.png


Cocoa - London and New York cocoa futures have settled lower as we move into winter. Over the last three months May 2019 delivery futures are down 6% and 7% respectively. This puts London May delivery trading at $1,601 and New York trading at $1685/tonne. A good growing season in West Africa is the reason for lower prices. The world’s three largest Cocoa producers (Ivory Coast, Ghana and Indonesia) are in the midst of their harvest season.

Wheat - After swinging upwards over the summer due hot, dry conditions reducing output UK feed wheat and Paris milling wheat futures are have been settling lower during autumn. In GBP terms UK feed wheat for delivery in November 2019 is down 6% on the quarter to £157/tonne (but up 10% YoY) and Paris milling wheat for delivery in December 2019 is down 3% on the year to £167/tonne (but up 21% on YoY). Relatively speaking these prices are elevated above recent year levels and will be attracting wheat imports. The quicker decline in UK feed wheat prices relative to continental European milling wheat prices is due to several factors including the closure of biofuel plants in the UK, the likely drop in forward purchasing activity related to Brexit uncertainty, and UK feed wheat being too costly given its quality relative to the higher quality Paris milling wheat.


Electricity - The markets have been responding to a changing dynamic, plentiful gas, high wind production and although demand is increasing it is in line with forecasts. Higher US gas prices is putting some pressure on prices, but from a September backdrop of doom and gloom, the markets look and feel like than can cope for now through the Winter

Oil has been on a sustained bearish run, driven by lower demand and no real shortfall despite Iranian sanctions. The market is responding to over buying through October. With low demand and a firm bearish grip traders are asking if oil will have sustained run in $50 - $60 range.

Gas has been flowing well with storage in Europe and UK looking reasonably full. LNG gas from the US is a bit more expensive than we would expect, but demand remains reasonably low.

Carbon has risen again back to €20/tonne and this continues to inflate long term prices. Brexit and continued guesswork on whether the UK will be able to sell EUA's beyond 2020 into the market will cause some concerns. Traders appear content to "buy the rumour and wait to sell the fact".

Metals & industrials

Refined metal futures have found some stability in the last few weeks after a bearish summer.

Aluminium futures in Shanghai and London are sitting at $1,977 and $1,951/tonne respectively. In USD terms this is where the markets were at the beginning of November but 15% and 7% lower YoY.

Copper has followed the same trajectory. Chicago, Shanghai and London futures are trading at $6,020, $7,070 and $6,189 respectively. This is flat on the month and 9% to 11% lower YoY depending on the market. London

Zinc is trading at $2,487/tonne, 21% lower YoY. Shanghai Zinc is trading at $2,972/tonne, 22% lower YoY.

Ferrous and rubber futures are also down with Shanghai Rebar and Hot Rolled Coil 12% and 15% lower YoY and Shanghai Rubber down 19%.

There are is a long-term and a short-term reasons for this, and both involve China.

  1. In the longer term Chinese economic growth is maturation and slowing. Q3 2018 GDP growth was recorded at 6.5% officially (likely lower given the tendency to inflate statistical figures). This is the lowest its been since Q1 2009. As the Chinese economy matures, the break neck growth we’ve seen in the past is simply not possible any more and thus industrial commodity demand growth will slow alongside this.

  2. In the shorter term the on-going US-China trade dispute is disrupting the free manufacturing of goods in China for the US market and reducing industrial commodity demand. The short-term trade dispute factor will be depressing demand whilst the long-term economic maturation factor will mean an underlying, voracious hunger for industrial commodities which has underpinned China’s demand for industrial commodities in the last decade is no longer strong enough to counteract this.

Precious metals have fared better than industrial commodities with gold and platinum over the last three months at 2% and 8% respectively, and silver 1% lower.

Cryptocurrencies continue their steady decline with bitcoin 16% lower on the week, 43% lower on the month and 58% lower on the year.