Just two weeks ago we were expecting commodities to fall. The Thomson Reuters/Jefferies CRB Index (composed of 19 commodities) stayed rangebound during the first half of the year but the recent weakness among base metals suggested that other commodities would follow.
The index has now broken that six-month price range as commodities fell across the board in July. Energy prices fell in July, putting crude oil back below $50 a barrel. The US oil rig count rose last week for the third time in the last four weeks while foreign production is likely to expand too.
China’s stock market tumble raised concerns about China’s economy, which caused a sell-off in commodities. Despite the sharp sell off, China’s stock market hasn’t shown real signs of hitting a bottom and further selling might be around the corner, which means that this commodity wave might have not reached the shore yet.