UNCTAD GLOBAL COMMODITIES FORUM
13-14 April 2015
End of Commodity Super-Cycle?
Introduction
By
Mr. Janvier Nkurunziza
Chief, Commodity Research and Analysis Section
Special Unit on Commodities
UNCTAD
The views expressed are those of the author and do not necessarily reflect
the views of UNCTAD.
Global Commodities Forum 2015
14-15 April 2015, Geneva
End of commodity super-cycle ?
Introduction
Janvier D. Nkurunziza
Chief, Commodity Research and Analysis Section
Special Unit on Commodities, UNCTAD
Outline
•
Long term trends in global commodity markets
•
Main drivers of commodity prices over the last
years
•
Prospects in global commodity markets
•
Concluding remarks
Historical trends in commodity prices
•
•
Global commodity markets : succession of boom and busts since 70s
2003-2011 : longest and broadest boom (commodity super-cycle)
350
Commodity
super-cycle
300
250
200
150
100
2008
Financial
crisis
50
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0
Non-oil commodities, nominal
Source : Data from UNCTADStat
Non-oil commodities, real terms
Price indices of selected groups of commodities:
Agricultural products and Minerals, ores and metals
•
•
2003-2011 : broad-based commodity cycle
From 2011 : prices are declining but remain high compared to long term trends
400
Price indices, nominal (2000=100)
350
300
250
200
150
100
50
0
Non-oil commodities
All food
Agricultural raw materials
Source : Data from UNCTADStat
Minerals, ores and metals
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Price indices of selected groups of commodities
energy markets
250
Price indices for crude oil, coal and natural gas (2010 =100)
200
150
100
50
0
U.K. Brent
Coal, Australia
Source : Data from IMF, IFS
Natural gas, US
…Cycle with heightened volatility
Price volatility of selected groups of commodities (s.d. of annual price change)
Percentage
30
25
20
15
10
5
0
Non-oil commodities
All food
1981-1990
1991-2000
Agricultural raw materials
2001-2010
2011-2014
Minerals, ores and metals
Main drivers of commodities prices over the past years
• Market fundamentals : supply and demand
400
30
Wheat and maize prices vs. ending stock to use ratio
350
25
20
US$/tonne
250
200
15
150
10
100
5
50
0
0
2006
2007
2008
Wheat (Stock to use)
Source : Data from AMIS
2009
2010
Maize (Stock to use)
2011
2012
Wheat, US$/tonne
2013
Maize, US$/tonne
2014
Stock to use ratio (percentage)
300
Main drivers of commodities prices over the past years
•
•
Global economic factors
Growth led primarily by developing and emerging economies, especially China
GDP growth in groups of countries and China
(2005 US dollars at constant exchange rate).
16.00
14.00
12.00
10.00
Percentage
8.00
6.00
4.00
2.00
0.00
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
-2.00
-4.00
-6.00
China
Developed economies
Source : Data from UNCTADStat
Developing economies excluding China
Emerging economies
World
2013
Main drivers of commodities prices over the past years
China, leading importer in global commodity markets
China's share in world imports for selected commodities (current dollars)
Natural gas
Sugar
Barley
Cereals (excl. wheat, rice, barley,
maize)
Milk, cream and milk products
2013
Petroleum oils
2011
Coal
2000
Natural rubber
1995
Aluminium ore and concentrates
Copper ores and concentrates
Cotton
Nickel ores & concentrates
Oil seeds and oleaginous fruits
Iron ore and concentrates
0
10
20
30
40
Percentage
Source :Data from UNCTADStat
50
60
70
Main drivers of commodities prices over the past years
Global industrial production
20
Industrial value added, % annual growth rates (2000-2013)
15
10
5
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
-5
-10
High income: OECD
Source :Data from World Bank, WDI
Sub-Saharan Africa
Latin America & Caribbean
China
India
Brazil
2013
01/1973
12/1973
11/1974
10/1975
09/1976
08/1977
07/1978
06/1979
05/1980
04/1981
03/1982
02/1983
01/1984
12/1984
11/1985
10/1986
09/1987
08/1988
07/1989
06/1990
05/1991
04/1992
03/1993
02/1994
01/1995
12/1995
11/1996
10/1997
09/1998
08/1999
07/2000
06/2001
05/2002
04/2003
03/2004
02/2005
01/2006
12/2006
11/2007
10/2008
09/2009
08/2010
07/2011
06/2012
05/2013
04/2014
Main drivers of commodities prices over the past years
US dollar exchange rate and monetary policy
350
140
US$ Index vs. Non-oil Commodity price Index
300
120
250
100
200
80
150
60
100
40
50
20
0
0
UNCTAD Non-oil commodity price index, nominal
Source : Data from UNCTADStat and US Federal reserve
US Dollar Index, nominal (right axis)
Main drivers of commodities prices over the past years
Other factors
 Macroeconomic policies in developed economies
•
Expansionary policies
 Financialization of commodity markets
•
Also underpinned volatility in the markets
 Energy prices transmitted to agricultural commodity
and metals markets
 Exogenous shocks
•
•
•
Weather patterns
Environmental concerns
Trade policies (quota, exports ban)
Prospects in commodity markets (?)
Agricultural commodity markets
Upside risk factors
Downside risk factors
• Comfortable stocks helped by good crop
conditions
• Monetary policies in US (strong US dollar,
increase in interest rate following the end of US
stimulus plan)
• Slower global economic growth
• Low energy prices
•Recovery in the US economy
•Increased demand from emerging
economies
•Adverse weather patterns
Prospects in commodity markets (?)
Minerals, ores and metals
Upside risk factors
Downside risk factors
• Gloomy economic prospects of industrialized
economies (esp. the Euro zone)
• Slower growth in emerging economies, esp.
China
• Economic restructuring in China away from
investment to consumption (downside risk for
iron ores and copper prices )
• Strong US dollar, high interest rate (end of US
stimulus plan)
• Low energy prices
• Recovery in the US economy
• Demand led by emerging economies such as
India
• Export restrictions
• Economic restructuring in China away from I
to C (upward pressure on zinc, aluminium,
tin, lead prices)
Prospects in commodity markets
Energy
Upside risk factors
Downside risk factors;
• Gloomy economic prospects in industrialized
economies;
• Slower growth in emerging economies, esp.
China
• Good supply of conventional and nonconventional oil
• Strong US dollar
• Recovery in the US economy;
• Geopolitical tension disrupting oil
production
• Rebound in oil demand (?)
• Production disruption from OPEC and
Non-OPEC countries (?)
• Slowing of shale production
Concluding remarks
• Forecasting price trends in commodity markets: a challenge!
• Commodity prices have been easing but remain relatively high
compared to their pre-2003 levels
• From short to medium run, much factors are likely to be
downside risks in global commodity markets:
-
Oversupply
Gloomy global economic growth
Low energy prices
Concluding remarks (ctnd)
• Then, commodity prices are most likely to moderate further in
coming months (short term)
• Declining prices have adverse effects on the terms of trade and
macroeconomic performance of CDDCs
• From medium to long term… high uncertainty : balance or
imbalances between downside/upside risks factors
• Long term policies in CDDCs should therefore prioritize
economic diversification to face the uncertainty
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