The CRB-index has increased by almost 6% over the past month. The recovery was led by a robust uplift in oil prices.
China is partly responsible for the recovery in prices, since the country has a strong foothold in the imports of many commodities.
China’s impressive rebound from Covid-19 is mainly due to stronger output from the production side. The V-shaped recovery in both passenger car production and sales has been particularly strong.
Given the Chinese rebound, investors expect a similar recovery for other economies. This has spurred investor risk-on sentiment.
As long as the Chinese economy posts positive macro-economic numbers, sentiment in many commodity markets will benefit. However, we still view the downside risks as high. The fragile relationship between the US and China, the high availability of most commodities and the possibility of new Covid-19 outbreaks globally are the main risks in our view.
Monthly-Commodity-Insights-Jun-2020.pdf (871 KB)