In our November report, SKILLSOOP forecasted rising natural gas prices due to capital constraints and investment shortfalls. This trend appears to be unfolding as expected. As winter intensifies in Europe and North America, increased demand is expected to push prices higher.
Oil prices are experiencing a mild decline, with support holding at $66 per barrel as indicated in November. Geopolitical tensions, particularly a potential direct conflict between Russia and the U.S. or between Iran and the U.S., could lead to significant price increases. In the interim, a weakening global economy, particularly in China, the U.S., and Japan, is suppressing oil prices. If this economic weakness persists, oil prices could dip to $50 per barrel. At the time of writing, Ukraine has launched long-range U.S. missiles into Russia, which places various regions of Europe at heightened risk.
Copper prices are expected to continue their downward trend, having already declined since their May peak. Weak stimulus from China and the strength of the U.S. dollar will continue to exert downward pressure on commodity prices. Additionally, former President Trump’s focus on tariffs may disrupt global trade and growth expectations.
As forecasted in SKILLSOOP’s November report, iron ore prices are on a steady decline. China’s stimulus efforts have proven insufficient, while advancements in recycling technologies are contributing to the downward pressure on iron ore. As Rio Tinto’s Simandou supply increases, we anticipate an eventual market surplus, which will push iron ore prices down to approximately $80.
Aluminium prices have surged due to the removal of tax rebates on Chinese exports. If this rebate is passed on to importers—as is possible, given the contraction in Chinese supply—aluminum prices may increase further. This rebate withdrawal could be part of a broader strategy to counteract potential U.S. tariffs.
In the agricultural sector, corn export inspections increased slightly week-over-week, reaching 32.3 million bushels, which is on the higher end of analyst estimates ranging from 25.6 million to 35.4 million bushels. Mexico remains the top destination for corn exports, receiving 15.6 million bushels. Cumulative totals for the 2024/25 marketing year are ahead of last year’s pace, with a total of 356.8 million bushels.
Wheat export inspections, however, were disappointing, reaching only 7.2 million bushels, which fell below analyst estimates of 11.0 to 15.6 million bushels. Mexico again was the largest destination, importing 2.3 million bushels. Nevertheless, cumulative totals for the 2024/25 marketing year remain moderately ahead of last year’s pace, totalling 379.4 million bushels. Ukraine’s agricultural ministry reported grain exports through November 18, including 306.8 million bushels of wheat and 238.2 million bushels of corn. Both figures exceed sales from the 2023/24 marketing year.
Cocoa prices continue to rise due to ongoing supply shortages, which are impacting profit forecasts for major manufacturers reliant on this commodity. Contributing factors include European deforestation regulations set to be enforced from December 30, 2024, as well as structural declines in the Ivory Coast and Ghana due to aging crops and viral insect infestations.
Gold has experienced a healthy pullback, with suppression driven by bullion bank manipulation in paper markets. A strong U.S. dollar will push global inflation higher, particularly in the context of geopolitical instability. As nations attempt to lower interest rates to stimulate their economies, inflation is expected to surge, causing gold prices to surpass $3,000 per ounce.
The U.S. dollar continues to rise, largely driven by investor confidence in the Trump administration’s economic policies. This trend has led to capital flowing from bonds into equities. However, a strong dollar hampers the U.S.’s ability to re-industrialize, which may prompt President Trump to weaken the dollar through stimulus, leading to further rejection of U.S. treasuries.
The silver deficit is projected to decrease by 4%, as production increases by 1% from Chile, Mexico, and the U.S., while recycling efforts grow by 5%. Overall, a 2% increase in silver supply is expected to offset a 1% growth in demand. Despite this, analysts continue to forecast a rapid decline in silver availability. The long-term outlook predicts silver prices could exceed $200 per ounce over the next decade.
U.S. 10-year Treasury yields are expected to rise as creditor nations seek to avoid U.S. risk, and investor confidence in the Federal Reserve’s ability to manage inflation and the government’s ability to control its budget wanes. We predict an initial flight to safety, which will temporarily lower yields, before rates gradually climb towards 6% over the longer cycle.
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