Despite all the talk of a commodities boom, some markets have now reversed the year’s gains and several more are on the cusp of doing so.

Soybean futures prices erased their 2021 lead, slipping more than 20% from an eight-year high reached in May, while corn and wheat also fell. The Bloomberg Grains Spot sub-index slipped the most since 2009 on Thursday, before rising slightly on Friday as markets recouped some losses. Other commodities that have seen their large gatherings evaporate include platinum, while nickel, sugar and even lumber have weakened.

The fact that some markets fall while others – including crude oil and tin – retain gains underscores how unevenly the complex responds to reopening and expanding economies. As these materials have climbed on strong demand fundamentals, others face their own headwinds, such as easing concerns over soybean supply and monetary policy uncertainty in the event of the ‘gold and silver.

The grain index has fallen the most since 2009

Some materials were also affected this week by signals from the Federal Reserve regarding interest rate hikes, the rising dollar and China’s efforts to slow inflation. The Asian country has said it will release metals from state reserves in a timely manner to bring prices back to a normal range, stepping up efforts to slow the surge in commodities.

“The risk is at the fore thanks to the hawkish words of the Fed, which have come in the wake of Chinese government directives in the previous weeks,” said Michael Cuoco, head of hedge fund sales for metals and materials. in bulk at Groupe StoneX. “The central bank’s stimulus measures helped markets gain momentum in the spring of 2020, and there is now a bit of a macro reset.”

Even some of the markets that are clearly benefiting from the reopening are seeing a pullback, with copper heading into its worst week in over a year. A large backlash of many commodities and seasonality are part of the recent drop in futures contracts, while improving weather conditions are hurting the prices of many agricultural commodities.

  • Chicago soybean futures rebounded over 2% on Friday, but still head for a weekly loss of over 11%, the worst performance in seven years. Corn and wheat also recovered a small portion of Thursday’s declines.
  • Base metals were mixed after Thursday’s losses. Copper fell 0.6% on the London Metal Exchange and was heading for its biggest weekly loss since March 2020. Nickel was up 1%. Iron ore slipped 0.3% in Singapore.
  • Precious metals rebounded after substantial declines. Gold added 0.6%, but is still heading for its worst week in over a year. Palladium rose 1.2% after falling 11% on Thursday.
  • Chinese futures caught up with the rout overnight. Rapeseed and soybean oils fell, and copper and zinc fell.

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This notice was published: 2021-06-18 03:25:56


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