After rallying in October, Scotiabank’s Commodity Price Index lost ground again in November, declining 5.4% month-over-month (m/m), and will end 2015 down more than 30% from a year ago. While many commodity prices — including base metals (excepting nickel) — remain well above the 2008-09 recessionary lows, today’s weakness is broader based, extending to ferrous metals, natural gas & propane and, to a lesser extent, potash.
“The coming year 2016 will remain challenging for most commodity producers — with global growth expected to remain lackluster at best,” said Patricia Mohr, Vice President of Economics and Commodity Market Specialist at Scotiabank. “In particular, competition in oil markets could intensify in the first half of 2016, as sanctions on Iran are lifted. On a more positive note, the gradual tightening of supplies of many commodities — linked to production curtailments and a sharp slowdown in capacity expansion — in the face of rising demand should start to boost prices across a broad front by 2017.”
According to the report, a number of commodities will outperform in the coming year. Ms. Mohr’s ‘top picks’ for investors in 2016 include:
Read the full Scotiabank Commodity Price Index online at: http://www.scotiabank.com/ca/en/0,,3112,00.html.
Scotiabank provides clients with in-depth research into the factors shaping the outlook for Canada and the global economy, including macroeconomic developments, currency and capital market trends, commodity and industry performance, as well as monetary, fiscal and public policy issues.
Scotiabank is Canada’s international bank and a leading financial services provider in North America, Latin America, the Caribbean and Central America, and parts of Asia. We are dedicated to helping our 23 million customers become better off through a broad range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. With a team of approximately 90,000 employees and assets of $856 billion (as at October 31, 2015), Scotiabank trades on the Toronto (TSX: BNS) and New York Exchanges (NYSE: BNS).
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