Neutral on commodity prices but cautious outlook

by: Georgette Boele , Hans van Cleef , Casper Burgering

At the end of June the CRB-index broke above the resistance layered at 140. Since then the index has risen at a modest pace driven by higher oil and metal prices.

Recently we have changed our base case scenario. We no longer expect a period of market panic/risk off in the near term. But there could still be waves of modest risk off.

Therefore we are now more constructive on the outlook for commodity prices. This means we no longer expect sharp weakness in prices in the near-term. So we have moved from negative to a more neutral outlook.

The outlook on China is more constructive so commodity demand from China could pick up at a modest pace but we think this is reflected in market expectations.

However, we continue to hold the view that oil prices, gold and silver prices have risen too sharply so some weakness is still expected in the near-term.

Monthly-Commodity-Insights-August-2020.pdf (870 KB)