Emporio Trading – Analyzes Factors Affecting Commodities Markets

PORT VILA, VANUATU / ACCESSWIRE / May 22, 2018 / The global commodities markets are predicted to have a bullish year, buoyed by supportive supply-side reforms in China and strong construction activity in the US and Europe. Emporio Trading notes that market forecasts for raw materials predict modest growth in 2018, as prices continue to stabilize after mid-2014 lows.

Supply and demand fundamentals are favorable to commodity market growth as economic activity ticks up in all major regions of the world. The World Bank reports energy prices are expected to climb 4% in 2018, while metals and agricultural commodities are forecast to decline slightly overall, after surging in 2017. Notably, benchmark oil prices are set to average $56/bbl, an increase of 6% year-on-year, buoyed by falling global stocks from the continuing OPEC and non-OPEC supply cut agreement. Iron ore is forecast to fall 10% over this year, and grains prices are anticipated to increase 1%.

Aside from fundamentals, the performance of raw material markets is subject to other factors that are beyond the control of producers and consumers. The weather has a significant impact on commodity stocks and prices. Harsh weather conditions can increase the use of natural gas and oil for heating while decreasing the production of heavily traded agricultural crops like wheat and corn. For example, in 2012 a drought in the US Midwest resulted in the lowest corn yield in 17 years and caused prices to rise around 50% by the summer of that year. The price spikes that ensue from weather-related events raise costs across the supply chains where those commodities are used, and these increases are usually passed on to consumers. Market actors have the option of hedging against price volatility by purchasing weather derivatives on the Chicago Mercantile Exchange, according to Emporio Trading.

Movements in the US dollar also drive trade in raw materials. Generally, there is an inverse relationship between the strength of the dollar and the demand for commodities. This is because global commodity contracts are often denominated in US currency. When the dollar falls, purchasing power rises for foreign buyers. And as they become relatively cheaper, the demand for commodities tends to rise. According to the Financial Times, the lower US dollar at the beginning of 2018 contributed to a 10% rise in Bloomberg's Commodity Index since mid-December 2017. Therefore, the robustness of the US economy (reflected in the value of the dollar) has an indirect influence on global commodity trade.

Emporio Trading is a forex brokerage company serving Europe, Asia, and Latin America. It was founded as a tech start up and is evolving into a market leader in financial services suited to both amateur and experienced traders. The firm offers competitive pricing, reliable trade execution, and innovative trading tools to help clients manage investments while bringing state of the art trading platforms and server technologies to its customer base, as well as 24 hours support, including live chat functionality. Emporio Trading aims to maximize the potential of investment portfolios while providing a transparent and efficient trading experience.

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