Commodities Could See Fall-Out From Emerging Markets Unrest

International Business Times

Published Feb 13, 2014 03:23PM ET

Updated Feb 13, 2014 03:46PM ET

Commodities Could See Fall-Out From Emerging Markets Unrest

By Nat Rudarakanchana - Emerging market unease from countries with high deficits in early 2014 could have knock-on impacts on natural resource markets, according to Goldman Sachs Group Inc. (NYSE:GS) research.

Gold, platinum, copper, iron and soybean markets could all be rattled by unease within “vulnerable” countries, which the investment bank defined as those with problems managing trade deficits.  

From this lens, vulnerable nations include Argentina, Brazil, India, Indonesia, Turkey, and South Africa, Goldman Sachs commodities analysts said in a note from Wednesday.

“Commodities most exposed…include gold on the demand side, and copper, iron ore, soybeans and platinum on the supply side,” they wrote. “This reinforces our existing bearish forecasts on these markets."

The note reinforces the globalized nature of natural resource prices and trading. India is a key source of gold demand and imports heavily. South Africa produces most of the world’s platinum and hosts a community of investors keenly interested in the metal. Brazil is close to overtaking the U.S. as the world’s top soybean producer.

Weaker currencies and slower growth in these countries, among other vulnerable groups, could hurt demand and impact supplies. Those five disparate commodities were the most highly levered to vulnerable emerging markets, on a quantitative Goldman analysis.