Commodity Markets Experience Week Of Sharp Fluctuations

Commodity markets experienced a turbulent week of sharp fluctuations as geopolitical risks, sanctions, and uncertainties surrounding central banks created a challenging environment for pricing.

Macroeconomic data from the US has fueled expectations that the Federal Reserve might maintain high policy rates longer than expected. Additionally, ongoing tensions in the Middle East have added to uncertainties, particularly affecting commodity prices.

The global battle against inflation is far from over, with concerns that Middle Eastern conflicts may amplify inflationary pressures by impacting commodity markets. An additional factor complicating pricing is the potential escalation in tensions between Israel and Iran, which could influence central bank decisions.

⁠Precious metals see mixed course

Geopolitical risks and demand from central banks and Chinese consumers contributed to rising gold prices.

Investors have been cautious due to US economic data and Fed Chairman Jerome Powell's hawkish stance, analysts suggest.

Silver prices increased due to reduced production in global mines and rising industrial demand.

As a result, the price of an ounce of gold rose by 2%, and silver by 2.9%, while platinum dropped by 4.3%, and palladium by 2% over the past week.

US President Joe Biden's remarks on China, including his call to triple tariffs on Chinese steel and aluminum, also drove base metal prices up. US and UK sanctions on Russian metals remain in place.

Copper prices increased on the back of expectations for strong global economic activity and a move toward green energy. The price per pound of copper soared 4.6%, aluminum 6.9%, lead 1.9%, nickel 9.4%, and zinc 1%. The price of copper per pound reached its highest point in two years at $4.51.

Energy group sees downward pressure

Oil prices fell due to a projected increase in US commercial crude oil stocks, indicating weaker demand. The American Petroleum Institute predicted that US crude oil stocks would rise by 3-4 million barrels.

Predictions of above-average spring temperatures in the US also contributed to lower natural gas prices. As a result, Brent crude oil dropped 3.4%, and natural gas on the New York Mercantile Exchange (measured in British thermal units or MMBtu) fell by 0.6%.

Higher crop yields in the US led to lower prices for corn and soybeans. Conversely, rising costs for seeds, fertilizers, irrigation, and labor worldwide have driven rice prices higher. Wheat prices on the Chicago Mercantile Exchange fell 0.6%, corn by 1%, and soybeans by 1.8%, while rice prices rose by 10.3%.

Higher cotton yields in Australia and India caused a drop in prices. However, concerns over the global supply of cocoa and coffee persist.

Reflecting these trends, the price of cotton on the Intercontinental Exchange dropped by 4.4%, sugar by 2.8%, while coffee rose by 5.2% and cocoa by 9.4%.

The price of cocoa reached a record high of $11,722 per ton, and coffee prices peaked since February 2022, reaching $2.4540 per pound.

*Writing by Emir Yildirim -