Friday, August 16, 2019
1. Oil highly sensitive to trade war
- Oil prices have whipsawed in recent weeks, gyrating on every whim and whisper relating to the U.S.-China trade war. Oil plunged by more than 7 percent when President Trump announced tariffs on China; rebounded by nearly 4 percent when Trump subsequently delayed them; but then fell a day later (August 14) when bad economic data emerged.
- The “dramatic price response came as no surprise given that oil prices also suffered the heaviest losses of all commodities when US President Trump announced the punitive tariffs on 1 August,” Commerzbank said in a note.
- The reaction of base metals was “considerably more muted,” Commerzbank said, which was surprising since metals are usually sensitive to economic fluctuations. But there are a few reasons for this. “For one thing, metals prices recently have been virtually immune to negative headlines concerning the trade conflict between China and the US and have stopped reacting to them,” Commerzbank said.
- But the upside has been limited too. The postponement of tariffs does not mean they will never happen. The trade war is a long way from being resolved.
2. Corn prices plunge again
- Corn, like other agricultural goods, was hit hard from the trade war beginning last year. But prices rallied this spring when horrific floods delayed plantings in the U.S. farm belt, raising concerns about…