We relaunch our Commodities Forecast Update in a new format called Commodities Market Guide
Key themes
Concerns over the outlook for global growth will persist in the short term. For the medium term, we expect the Chinese economy to manage a soft landing while manufacturing should account for a smaller share of the economy. The state of the Chinese property market is improving. We look for global growth to rise to 3.7% next year from 3.3% this year. We expect the Fed to hike in December and the ECB to announce it will continue asset purchases beyond September 2016.
Oil
We expect a rebalancing of the oil market to take place next year, which should lead to a recovery in oil prices. Key upside risks to our forecast come from the fragile geopolitical situation in the Middle East, where there is a risk of further deterioration on the back of low oil prices. Disruptive El Niño weather may interfere with major oil trade routes. We recommend consumers hedge Q4 and 2016 exposure at current levels.
Metals
Stronger global economic growth, a recovery in oil prices and a continued rebalancing of supply should lead to an increase in base metal prices next year from current low levels. Near-term production in South America and Southeast Asia is threatened by disruptive El Niño weather. We recommend consumers hedge Q4 and 2016 exposure at current levels.
Grains
Disruptive El Niño weather still poses a risk to the global grains and oilseeds market but strong production limits upside price potential. A higher oil price next year should support higher grains and oilseeds prices. We recommend consumers hedge exposure in Q4 and 2016 at current levels.
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