As oil prices retreated from the refinery demand driven spike (see post), the CRB BLS Spot Index of 23 commodity markets (see description) hit a new low for the year. Per earlier discussion (see post), the equity markets have been discounting the rally in crude and so far have been proven right.
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| Source: Barchart |
Recent price declines in commodities are not limited to energy however. Corn, coffee, copper, and several other products are under pressure.
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| CORN FUTURES |
Deceleration in emerging markets' economic growth (particularly China) and increasing competition among commodity producing nations have been responsible for some of the declines. Tighter current or expected monetary policy, whether in India, China, Turkey, or in the US (accompanied by higher interest rates) has also added to weakness in a number of commodity sectors.
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