The Commodities to Watch in 2019 – by Jeremy Hill, Ranjeetha Pakiam and Jake Lloyd-Smith (Bloomberg News – January 4, 2019)

https://www.bloomberg.com/

Commodities took a kicking in 2018 — with deep losses in everything from oil and copper to coffee and sugar — so what’s in store for the 12 months to come? The inaugural What to Watch of the year offers a selective run through of prospects and pitfalls for some of the top raw materials, and it’s a reasonably positive picture that emerges.

That road map comes ahead of a busy period. The U.S.-China trade fight will be in the news next week, with a U.S. delegation in Beijing for talks from Monday. In addition, there’ll be more pointers on the macroeconomic outlook, with the World Bank updating its Global Economic Prospects report on Tuesday and a speech from Federal Reserve Chairman Jerome Powell on Thursday. Before that — and following a turbulent few days — Powell speaks in Atlanta later Friday.

Oil’s Well

The standout feature in commodity markets last quarter was crude’s swoon from four-year high into a bear market. The drivers of the reversal were record U.S. shale output, a clutch of sanctions waivers on Iranian flows, and a supply cut from OPEC+ deemed by some as too little.

Concern about a deteriorating global economic outlook gave bears further ammunition. After that drama, prices may recover, with supply risks underappreciated. In 2019, watch for more losses in crisis-hit Venezuela as supply risks tumbling below 1 million barrels a day. On top of that, U.S. waivers on Iranian cargoes are temporary, and not all may be renewed in May.

And don’t underestimate the Saudi resolve to make the cuts stick. OPEC’s next meeting is in April, and prices may have regained some ground by then. The median Brent forecast tracked by Bloomberg is $68 a barrel, compared with about $57 at present.

For the rest of this article: https://www.bloomberg.com/news/articles/2019-01-04/what-to-watch-in-commodities-in-2019-winners-and-losers-line-up

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