COMMODITY PRICE MONITOR

Transcription

1 RBC commodity price index January 1994 = 0 Index excluding energy product prices January 1994 = Energy products sub-index January 1994 = RBC s commodity price index is a Fisher chain-weighted index of spot or transaction prices of 24 of the top exported Canadian-produced commodities. The weight of each commodity in the overall index and various subindices is determined by its share of exports and is updated annually in February. Joseph Allegritti Research Associate [email protected] COMMODITY PRICE MONITOR July 20, 2016 RBC commodity price index rose again in June The RBC commodity price index rose a solid.9% in June and built upon May and April advances of.9% and 4.% respectively. This is the fourth consecutive monthly gain for the index marking a recovery in the first half of 2016 with Q2/16 up 17% over Q1/16. Similarly, the energy products subindex recorded a fourth consecutive monthly gain in June and was up 1% in Q2/16 from Q1/16, driven by the continued advance in crude oil prices. The index excluding energy products showed only a slight 0.6% increase in June, supported by a monthly gain in precious metals (+1.%). The overall index remains well below its year ago level down 9.%, with of sub-indices remaining lower relative to June 201. The energy products sub-index rose in June (+7.8%) for a fourth consecutive month. All sub-components were higher in June with the largest gain recorded by natural gas prices up % for the month. The price of natural gas increased in June due to a decline in production and increased electricity usage due to warmer weather. 1 Natural gas prices remained 7% below year ago levels. The robust gain in June also reflected a climb in the price of crude oil (+4.4% m/m) that built upon the May (+14.7% m/m) and April gains (+7.8% m/m). The EIA attributed the upward price pressure in June mainly to significant supply side disruptions. 2 The price of coal rose a solid.8% in June. All component prices in the energy sub-index remained below their year-ago levels in June, with crude oil down 19% and coal 9% lower. The agricultural products sub-index showed signs of modest strength in June and rose above May levels. The gains in June (+1.2%) point to some resilience in Q2/16 after the sub-index slumped starting in mid-201. Price gains for corn (+6.%), potatoes (+6.1%) and salmon (+.%) pushed the sub-index higher in the month as the USDA cited challenging growing conditions responsible for driving up prices again in June as was the case in May. The sub-index remains 10% below its year ago level in June 201. The forest products sub-index was up a mere 0.% in June. The price of lumber rose 0.8% in June marking the fourth consecutive monthly advance and remained near its highest level since February 201. The price of lumber is 10% above the June 201 level. The sub-index was up % in June from its year ago level and up 11% in Q2/16 from Q1/16. The non-precious metals & minerals sub-index was little changed in June (-0.1%) after falling in May (-2.1%). The sub-index remained at near May levels despite continued iron ore price declines of nearly 6% in June after dropping 10% in May on heightened uncertainty over market demand surrounding the Brexit vote. 4 All sub-components remain below their year ago levels leaving the sub-index down 16% from June 201. The precious metals sub-index rose a further 1.% in June as modest gains in gold (+1.2%) and silver (+2.0%) carried the sub index higher in the month. The price of gold climbed in June, reaching it highest level since summer 2014 as investor demand increased in the face of market uncertainty over the Brexit vote outcome. Both gold and silver prices remained above their June 201 levels, +8.0% and +7.% respectively, leaving the sub-index 8% above its year ago level in June.

2 COMMODITY PRICE MONITOR JUNE 2016 Agricultural products sub-index January 1994 = RBC commodity price sub-indices Forest products sub-index January 1994 = Non-precious metals & minerals sub-index January 1994 = Precious metals sub-index January 1994 = 0 Period averages Q4-1 Q1-16 Q2-16 Apr-16 May-16 Jun-16 Indices RBC commodity price index Month-over-month/quarter-over-quarter % change Year-over-year % change RBC commodity price index ex. energy Month-over-month/quarter-over-quarter % change Year-over-year % change Sub-indices Agricultural products Month-over-month/quarter-over-quarter % change Year-over-year % change Energy products Month-over-month/quarter-over-quarter % change Year-over-year % change Forest products Month-over-month/quarter-over-quarter % change Year-over-year % change Non-precious metals & minerals Month-over-month/quarter-over-quarter % change Year-over-year % change Precious metals Month-over-month/quarter-over-quarter % change Year-over-year % change

3 Commodity prices trends Agricultural products COMMODITY PRICE MONITOR JUNE 2016 Barley Canola 0 Corn Wheat Potatoes Live cattle US$ per pounds US$ per pounds Live hogs Fresh salmon US$ per pounds US$ per kilogram

4 COMMODITY PRICE MONITOR JUNE 2016 Energy products Coal Commodity price trends Forest products Lumber US$ per 1,000 board feet Crude oil (WTI) Newsprint US$ per barrel Source: Bloomberg, RBC Economics Research Natural gas Pulp US$ per million British thermal units Source: Bloomberg, RBC Economics Research Precious metals Gold Silver US$ per troy ounce US$ per troy ounce

5 Commodity price trends COMMODITY PRICE MONITOR JUNE 2016 Non-precious metals & minerals Aluminum 1.0 Copper Iron ore Lead Nickel Potash Uranium Zinc

6 COMMODITY PRICE MONITOR JUNE 2016 Commodity price trends Period averages Q4-1 Q1-16 Q2-16 Apr-16 May-16 Jun-16 Agricultural products Barley (US $/tonne) Year-over-year % change Canola (US $/tonne) Year-over-year % change Corn (US $/tonne) Year-over-year % change Wheat (US $/tonne) Year-over-year % change Potatoes (US $/cwt)* Year-over-year % change Live cattle (US $/cwt) Year-over-year % change Live hogs (US $/cwt) Year-over-year % change Fresh salmon (US $/kg) Year-over-year % change Energy Coal (US $/tonne) Year-over-year % change Crude Oil (US $/barrel) Year-over-year % change Natural Gas (US $/mmbtu) Year-over-year % change Forest products Lumber (US $/0 board ft) Year-over-year % change Newsprint (US $/tonne) Year-over-year % change Pulp (US $/tonne) Year-over-year % change Source: Haver Analytics, Bloomberg, RBC Economics Research; * latest potato price based on percent change in BLS PPI index 6

7 Commodity price trends Period averages COMMODITY PRICE MONITOR JUNE Q4-1 Q1-16 Q2-16 Apr-16 May-16 Jun-16 Non-precious metals & minerals Aluminum (US $/lb) Year-over-year % change Copper (US $/lb) Year-over-year % change Iron Ore (US $/tonne) Year-over-year % change Lead (US $/lb) Year-over-year % change Nickel (US $/lb) Year-over-year % change Zinc (US $/lb) Year-over-year % change Potash (US $/tonne) Year-over-year % change Uranium (US $/lb) Year-over-year % change Precious metals Gold (US $/ounce) Year-over-year % change Silver (US $/ounce) Year-over-year % change Source: Haver Analytics, Bloomberg, RBC Economics Research 1 U.S. Energy Information Administration, Short-Term Energy Outlook, July Ibid U.S. Department of Agriculture, World Agriculture Supply and Demand Estimates, July RBC Capital Markets, Bulking Up, June 28, 2016 RBC Capital Markets, Commodity Comment: Bumps Ahead, July 2016 The material contained in this report is the property of Royal Bank of Canada and may not be reproduced in any way, in whole or in part, without express authorization of the copyright holder in writing. The statements and statistics contained herein have been prepared by RBC Economics Research based on information from sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or completeness. This publication is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy securities. Registered trademark of Royal Bank of Canada. Royal Bank of Canada. 7