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Commodity Movers and Shakers

The third quarter of 2019 has been impacted by the latest developments in US/China trade talks, political turbulence in Washington, and a flare-up of tensions in the Middle East. Somewhat surprisingly, the broad commodity indices have seen relatively small changes for the past few months. As of Thursday, the S&P GSCI index was down 2.4% for the quarter and up 10.8% for the year. The Thomson Reuters/Jefferies Core CRB Index was down 3.4% for the quarter and up 4.8% for the year.

There were several commodities that had extreme volatile price action over the past few months but will end the third quarter with relatively small net changes. Crude oil saw a price range of more than $13.00, but as of Friday it was down only 3.5% for the quarter. RBOB gasoline and lean hogs both had ranges of more than 22 cents, but they were down 3.0% and 0.9% for the quarter going into this weekend.

Despite a pullback in September, the metals markets have been the strongest sector in the third quarter, benefiting from the prospects of lower US rates and safe-haven inflows. Silver has led the way, with a 13% gain as it has played catch-up to the other metals. Platinum is up more than 10%, having received a boost from simmering South African labor tensions. Gold is up 5%, while palladium was nearly 7% higher late in this week’s trading.

Ag commodities have not fared well during the past few months. Kansas City Wheat is down than 15% off of burdensome near-term supplies. Corn is down nearly 14% after bearish surprises in USDA acreage and yield estimates. Coffee is down more than 10% as it deals with last year’s record Brazilian crop. Sugar is down 7% due to large production from Indian and Thailand this season. Cotton is down 9% as export demand is been damaged by US/China trade tensions.

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