Commodity Roundup: January 2015
Commodity prices mostly fell in January, led by losses in crude oil.
Crude oil prices plunged further as OPEC continues to refrain from substantially curtailing its output in the face of excess supply and falling prices. Nevertheless, steadily falling oil prices pose a risk to profitability of oil extraction in US shale fields and Canadian oil sands. Expected slowdown in oil sector investment should eventually lead to narrowing in the supply-demand gap for crude oil. Consequently, we expect crude oil prices to recover in late-2015.
Gold was the outlier among commodities and gained more than 4%. Safe-haven demand (amid political uncertainty in Greece and global growth concerns) aided prices in January. Investment demand rebounded in January and gold-backed ETF holdings marked a net accretion of 66 metric tonnes, the first increase in holdings since July 2014.
Industrial metal prices fell in January amid concerns over China’s growth prospects. Data released in January showed that China’s 2014 GDP growth came at 7.4%, slowest since 1990. Copper was the biggest loser among the major industrial metals, falling by 15% in the month.
Agricultural commodities also fell. Wheat fell 15% and corn fell 8% in January.