Commodity price gains have generally been led by crops with weather concerns supporting prices. Drought in Brazil raising concerns that this and next years harvest will be damaged. The most surprising bar on this chart is natural gas since the so called ‘polar vortex’ over the US resulted in a surge in demand for heating while the extreme cold prevented rigs from responding. Natural gas prices peaked in mid-February at over $6 per mBtu (at the time up over 50% during 2014) but since then warmer weather has caused prices to fall, giving up virtually all its gains since the start of the year. The weakest commodity prices have been industrial metals where signs of a slow down in China coupled with concerns about commodity financing deals has reduced demand for the metals. The exception has been nickel where the introduction of an ore export ban by key supplier Indonesia means Chinese buyers are now running down their stocks and searching for alternative suppliers.
Chart: % change in commodity prices during 2014
Related article: Chinese demand key to commodity prices in 2014