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Friday, 10 October 2014

Ebola fears could impact commodities

RESTRICTIONS on the movement of labour and goods as the Ebola crisis in West Africa worsens could have an impact on commodity markets, economists warn. Commodity prices have been largely unaffected by the outbreak, other than a two-week cocoa spike of 10 per cent in September, Capital Economics said this week.

Noting that the virus is "first and foremost a human tragedy", commodities economist Hamish Smith said the rising death toll meant a higher risk of the disease spreading. The three most-affected countries – Liberia, Guinea and Sierra Leone – are not large commodity exporters, other than Guinea's bauxite trade. The bauxite price has been steady on account of large stockpiles, but could rise if global supplies tighten. If the virus spreads to neighbouring Ivory Coast or Ghana, the impact on commodities could be much more severe, Mr Smith said. Ivory Coast is the world's largest cocoa producer and an outbreak of Ebola there would see cocoa prices spike again.

The commodity reached a three-year high of $US3221 a tonne in September before falling back on account of record production in Ivory Coast. Ghana is also the world's second-largest producer of cocoa and one of the top 10 producers of gold.

Source: theland.com.au