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Monday, June 21, 2021

China measures may not be enough to cool soaring commodity prices

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CBA says strong demand would limit China’s ability to cool commodity prices

The firm argues that China’s regulatory measures may not be enough to temper with the mood in commodities because of the strong underlying demand in the economy.Invest in yourself. See our forex education hub.

“China is a big economy, it’s a fast-growing economy and uses lots of commodities in doing so. Ultimately, it probably can’t pick the price it wants but it can affect the path of those prices.”

In particular, CBA’s agricultural strategist, Tobin Gorey, says that the firm remains “reasonably bullish” on agricultural commodities in particular as there is a risk for supply to tighten moving forward for corn and soybeans among others.

I reckon there’s not much arguing with that sentiment for now. China’s intervention was a good reason to take some money off the table after the sizzling run in commodities this year but the larger underlying trend hasn’t been derailed surely.



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