Commodity markets may be entering a “Goldilocks period” with prices settling across the globe.
A number of factors are combining to produce prices that are neither too hot nor too cold across a range of commodities, according to analysis in the January edition of Supply Business
The end of liquidity injections in the US, slowing growth in China, falling oil prices and benign weather during 2013 are all factors that have had a calming effect on markets.
However, risks remain around water supply and metals, with buyers urged to “rediscover hedging” as a means of managing fluctuating prices.
Caroline Bain, senior commodities economist at the Economist Intelligence Unit
, said: “While China is slowing, urbanisation and industrialisation are continuing, so we might see slower growth in some commodities and maybe even quite flat growth in some cases, but it’s not going to collapse.”
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