Who are the winners and losers in commodity products?
By Saengwit Kewaleewongsatorn
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Cocoa price rose dramatically over the last three year among the fall in commodity prices particularly oil, rice, sugar and iron.
Cocoa was the winner among the commodity products which its price increased nearly 42% during 2011 to 2014 from $2.3 per kilogram to $3.2. While other commodity prices dropped drastically over the last three years.
The price –hike in cocoa was driven by the shortage supply, saying the two tiny countries growing cocoa — Ivory Coast and Ghana — are facing the Ebola outbreak and a bad weather, sending the ripple across the chocolate oindustry. However, the chocolate bar companies are suffering from profit reduction as the retail price remains unchanged.
Apart from cocoa, there were many commodity products which were in the positive prospects, including coconut oil, copra, coffee, shrimp, zinc, tobacco, beef meat, chicken meat and palmkernal.
Orange was the biggest faller with 45.6% from $1.15 per kilogram to $0.62, followed by iron, maize, natural gas and crude oil.
As shown in graphic, the products prices being in line with oil prices were fallen in the same direction, sending the commodity producers, mostly are developing countries, could get further losses.
Oil price in global benchmark Brent crude has been plummeting for three year, since the glut in supply loomed in 2013 and was clearly seen a negative trend last year falling 38% between 2011 and 2014. The oversupply is seemed to be as a political economic issue between two sided oil giants the US and Organisation of the Petroleum Exporting Countries (OPEC) led by Saudi Arabia. And the intense situation still persist as the latest meeting of <a href=”http://www.bbc.com/news/business-30236058">OPEC decided to maintain oil production capacity</a>.
China’s economic downturn is considered as a key driver of domino effect as seen in the falling price in steel production industry that forced the Thailand-based steel maker Sahaviriya Steel Industry UK to close down its UK factory in Teesside.
Commodity prices have been falling since 2011, a reflection of the collision between excess production after a decade long increase in capacity and slowing demand from China, the world’s marginal buyer from oil to copper and wheat.
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