Energy prices fell sharply in June with declines of nearly 8% for crude oil. Investors in the US benchmark Crude Oil contract now have accumulated losses of more than 20% since the beginning of the year.
Whilst commodities sensitive to global growth prospects remained under pressure, agricultural commodities staged dramatic price upswings during the month with corn gaining 26% on deteriorating harvest prospects whilst wheat and soybeans advanced more than 10%. Farmers scaled back expectations for their corn and soybean crops as extreme heat and dryness expanded across much of the US midwest. Rainfall in June was 80% below the 30-year average for the month and corn yields are now expected to be 10% below estimates made earlier in the year. Speculative traders were forced to reduce their short positions as the agricultural markets enter what is typically a volatile period, driven by short term weather prospects.
On a different note, investors cheered Malaysian palm oil firm Felda Global Ventures’s trading debut. In the world’s second-largest IPO, shares surged 20% on their first trading day.
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