24 June 2020
- Our assessment of supply conditions this week is that we continue to see an improvement. This trend keeps any attempt for a break to the upside in check. Weather conditions are gradually emerging as the main swing factor for prices. For the time being our proprietary climate model is not suggesting any stress to emerge in late June/early July.
- Our short-term demand assessment for up and mid-stream demand also remains bearish. Politics aside, we continue to believe that weak demand is not pulling enough beans further downstream, which is leading to accumulation of supply mentioned above.
- The macroeconomic environment keeps improving. Evidence suggests that credit is finally expanding in key consumption regions. We expect this trend to continue as key economies re-open and the demand for credit lines from economic entities grows. The latest update from the price formation decomposition model reveals that the influence of macroeconomic forces in the overall price formation has increased marginally to 37.4%. Supply-side considerations remain the most important driver for price at 42%.