During the first half of this year, commodities experienced a bull market, but the market cooled off in June. JPMorgan pointed out in the latest report that global commodity inventories, excluding China, have rapidly decreased.

JPMorgan pointed out in its report on July 5th:

The available days of global commodity inventory in June 2024 remained at 65.4, almost unchanged compared to 65.3 in May.

However, excluding the Chinese market, the available days of global commodity inventory decreased by 3.5% month-on-month to 61.3 days, the lowest level in four months and the largest decline in 31 months.

In terms of commodity categories, JPMorgan stated that this decline was mainly due to the reduction in inventory of crude oil and refined products:

The available days of global oil and fuel in June decreased significantly by 2.5 days, the largest monthly decline in four years. The inventory in the OECD region continues to sustain due to the refining activity to meet the demand in the northern hemisphere summer.

With the decrease in crude oil inventory, crude oil prices have remained strong recently, and Brent crude oil futures have risen to $86/barrel. Some analysts pointed out that crude oil consumption in the third quarter will still be in the peak season, and further destocking will support oil prices.

In terms of other commodities, the supply of agricultural products such as cotton and basic metals such as copper and nickel has increased:

In terms of agricultural products, due to the increase in cotton supply, the available days of agricultural product inventory have increased in both monitoring indicators. Similarly, due to the increase in copper and nickel supply, the available days of basic metal inventory have also increased.

In addition, JPMorgan pointed out that although commodity inventories have seasonality, the speed of inventory decrease outside of China is higher than usual:

Commodity inventory is essentially seasonal. Looking from a seasonal perspective, the availability of inventory in June usually remains stable, with an average year-on-year growth rate of 0.12% over the past 5 years. However, the Global Commodity Inventory Monitor (GCIM), which excludes China, usually declines by about 1.06% month-on-month. The GCIM availability and trend in June 2024 increased by 0.06% month-on-month. However, the speed of decline in GCIM outside of China is much faster, with a month-on-month decline of 3.5%, more than three times the seasonal standard.

2024 June GCIM availability is consistent with the trend, with a month-on-month growth of 0.06%. However, the speed of GCIM decline outside of China is much faster, with a month-on-month decline of 3.5%, more than three times the seasonal standard.

Editor/ping