Commodities Prices Are Falling Due To Global Economic Slowdown Concerns: Brent Crude Oil, Silver Futures, Corn Futures

Summary:

• Brent crude extends previous weeks losses.
• Investors favour the US Dollar.
• Corn crop is suffering.

Brent Crude Oil extends losses

In response to US President Joe Biden's talks with European allies about restarting the 2015 nuclear deal, Brent crude futures dipped below $96 per barrel on Monday, extending losses from the previous week. According to Bloomberg, Biden discussed "ongoing negotiations" toward a nuclear accord with the heads of France, Germany, and the UK on Sunday, as well as "the need to strengthen support for partners in the Middle East region." Since June, the price of oil and other commodities has also fallen due to growing concerns about a slowdown in the world economy. Major central banks are doing this by aggressively raising interest rates to stifle the inflation that is out of control. The Sichuan province extended industrial power cuts and activated its highest emergency response on Sunday to address electricity shortages, endangering regional manufacturing output while top importer China continues to be beset by economic problems.

✕ Brent Crude Futures Price Chart

Silver futures extend losses

Silver futures dropped to the $19.1 per ounce level, on track to end the week 8% lower, and extended previous losses to a three-week low as investors favored the US dollar over non-interest-bearing bullion assets due to the Federal Reserve's promise to fight inflation. In light of the potential for further inflation in the US economy, St. Louis Fed President Bullard stated that he is considering raising interest rates by 75 basis points for a third time in a row. According to the minutes of the July FOMC meeting, the Fed will stop providing forward guidance and base its decisions solely on the most recent data. Policymakers also concurred that interest rates must continue to rise until they reach a restrictive monetary setting as opposed to the current neutral level.

✕ Silver Sep ‘22 Futures Price Chart

Corn crop quality deteriorating

After the USDA's weekly report revealed that the crop's quality was deteriorating amid heatwaves in the Midwest and plains, corn futures increased to a 1-week high. The agency gave the U.S. maize crop a good to exceptional condition rating of 61%, significantly lower than experts' expectations and a drop from the previous week's rating of 64%. The crop that will be harvested in September is likely to suffer from the hot, dry weather that was present during key corn pollination. However, despite USDA predictions for increased supplies in 2022–2023 and negative demand outlook brought on by rising recession fears, corn prices are still close to an 8-month low reached on July 5.

✕ Corn Dec ‘22 Futures Price Chart

Sources: finance.yahoo.com, tradingeconomics.com