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The economic problems in the EU continue to put pressure on commodity and financial markets worldwide. Commodity prices remain more driven by demand concerns and speculator activity than supply effects, with declines seen in a range of markets from plastics to softs and vegetable oils.
Sharp falls were seen in a range of markets this month, from metals to oils and soft commodities, as the resurgence of economic problems throughout the EU and the wider world led to a flight of capital from commodity markets. Concerns remain about the effect of the economic weakness on commodity demand.
Mixed movements were seen this August, with rising grain prices caused by drought in the US and volatile energy prices due to worries about EU government debts and the US economic climate. Packaging and metals have declined due to concern about a decrease in global demand, particularly in China and the EU.
High temperatures and drought are raising concern about grain prospects in the US while some heavy rain has delayed harvests in some parts of the EU. Steel prices have declined in Europe due to lower activity in the summer holiday period but crude oil rose as global supply is lagging behind rising world demand.
Much-needed rain helped alleviate dry conditions in the EU prompting falls in the grain and oilseed markets. Calmer conditions have been seen in ingredients, fresh fruit and vegetables after disruption caused by an E.coli scare. Crude oil fell following the release of stocks to counter the loss of Libyan supply.
The dry conditions seen in the EU throughout spring have raised concerns about crop development in the grain and oilseed markets, leading to price firmness. Crude oil fell over the month, impacting on transportation costs. EU electricity rose as some supply from the nuclear sector was shut down.
Crude oil prices remain high, driving prices upward in the energy and plastics markets. Elsewhere, prices were more mixed, with falls continuing for sugar and for dairy in general. Tea was also down sharply, but coffee prices continue to increase. Shipping costs were broadly down, reversing last month's bounce.
The long-term impact of the Japanese earthquake and its aftermath on commodity prices has yet to be fully assessed. This, together with continuing violence in the Middle East, is creating greater than usual uncertainty in the commodity markets.
Sharp price increases were seen in the dairy sector supported by the tight supply situation in the world market, with prices nearing the peaks of 2007. Crude oil prices saw strong gains with sentiment affected by the political unrest in Libya as the conflict between the population and government worsens.
Grain prices continued their upward trend supported by increased import demand from North African states to secure supplies as a result of the political instability in the region. The instability helped crude oil prices reach USD 100 a barrel as did strong demand and better results for the world economy.
Price continued to increase in the main commodity markets with further rises seen in grains and vegetable oils, following the floods in Australia and as a result of drought affecting the oilseed crop in Argentina. Higher energy and feedstock prices have led to increased volatility in the plastics sector.
Price setbacks were seen in soft commodities, whereas further price rises have been experienced in the vegetable oil market as supply remains tight and demand is strong. Energy prices have shown increases as the latest cold snap affecting much of Europe has caused strong demand for fuel and gas.
Vegetable oil prices continued their upward trend with further gains seen over the past month as supply for the current season is tight. Plastics prices experienced considerable gains on the back of increased energy and feedstock prices coupled with strong Asian demand.
Sharp price increases were seen over the past month in both the food and industrial sectors. Higher prices were registered in tea, sugar and vegetable oils due to concerns over crop development and tight supply. Crude oil and energy prices seem to have recovered and have started to show upward movements.
The upward price trend continued in the grain sector supported by bans on Russian grain exports imposed during August. Vegetable oils have also trended upwards due to poor weather. Mixed trends have been seen in the plastic market with Asian origin prices increasing whereas in the EU prices have seen declines.
Commodity prices have been mixed over the past month, with decreases seen in some markets such as plastics and dairy. However, sharp rises were experienced in grains, due to drought in Russia and high temperatures in the EU diminishing grain prospects, and sugar due to demand depleting stock levels.
Sugar and coffee prices both increased sharply over the month due to temporary squeezes in supply. Feedstock chemicals for plastics have fallen in price but these have yet to pass through the supply chain, with plastic prices continuing to strengthen. Egg and egg product prices in the EU have continued to fall.
Dairy prices continued to edge higher supported by strong demand and very low supplies worldwide. Sharp decreases were seen in the energy market influenced by concerns over the stability and demand of the Eurozone. The Euro continued to weaken against the USD, increasing competitiveness of EU exports.
The dairy market has seen strong gains supported by reduced milk availability and tight supply of the main dairy products in major producing regions. Pulp and paper prices continued to increase as stock levels remain low. The weakness of the Euro is boosting EU export competitiveness in the world market.
Dairy products registered price increases as the spring flush in the northern hemisphere is delayed. Sugar prices have fallen to levels not seen for many months partly influenced by good crop prospects in India. Crude oil continued its upward trend influenced by strong demand and OPEC controls on production.
Sugar prices seem to have finally reached their peak as sharp declines have been seen in the past month. The downward trend also continues in the dairy sector with butter and SMP prices dipping lower. A surge in plastic prices, influenced by higher feedstock costs, has been seen.
Interesting movements have been seen in the dairy market with prices for many of its products falling sharply from the highs reached in 2009. The USD appreciated against other currencies due to the better than expected recovery in the US economy.
Steep price rises have been seen in commodities such as sugar and rice on the back of supply concerns and increased buying activity. Energy costs also surged with the largest rise seen in gas. For crude oil, after a rather volatile month, prices crossed the USD80 per barrel mark.
A number of commodities continued to increase this month, with the vegetable oils and dairy sectors proving to be particularly strong, especially in the southern hemisphere. However, energy costs such as gas and electricity have fallen followed by some metals and plastics.
Many upward movements have been seen in key commodities with sharp increases in energy, grains and dairy products such as butter. Crude oil prices have also started to increase on the back of improved manufacturing and better economic prospects for some of the main economies.
With largely successful grain and oilseed harvests now nearing completion, prices have generally continued to weaken. Dairy products are increasing in price due to the seasonal dip in northern hemisphere milk production. Concerns about the economic recovery have led to crude oil falls.
It seems that cereal prices have finally bottomed out as the northern hemisphere wheat harvest draws to a close and the latest US projections indicate that maize will be up for a bumper crop. News that major economies may be out of recession is influencing energy and industrial markets.
Good progress in cereal and vegetable oil harvests in the northern hemisphere are influencing prices as the availability of new crops continues to increase. Crude oil prices fell back slightly over the month and this also saw related price falls in a number of other markets.
The cereal harvest is having a strong influence on grain markets and with new supplies competing against large old crop ending stocks the pressure is starting to be felt. Crude oil prices have continued to rise over the past month, influencing many commodity markets.
Crude oil prices surged this month and continued to affect both agricultural and industrial commodities. Hot and dry weather conditions in parts of the northern hemisphere reduced forecast production for many grains and oilseeds.