Commodity markets appear to be in turmoil as the US dollar index continues to rise and several factors are coming into play with grains, livestock, metals and other commodities. Tightening monetary policy, Europe's energy crisis, and China's COVID-19 lockdowns have all contributed to a risk aversion in the economy and have caused significant pressure in the commodities markets.
Shipping, in particular, has been hit hard due to the pandemic as global trade has been disrupted and consumer demand has dropped. Video by Jim Roemer illustrates the weather's impact on commodities and why March may be cold and snowy. Additionally, western sanctions on Russian oil, steel, gold, and other commodities haven’t resulted in the severe supply disruptions that many expected.
The US and G-7 partners announced sanctions Friday on 200 individuals and entities that are supporting Moscow's war efforts against Ukraine. This could further complicate the commodities markets and is something to watch in the coming days.
Mark Cudmore and Anna Edwards break down today's key themes for analysts and investors on “Bloomberg Markets Europe”, providing more insight into the current state of the commodities markets.
Notably, Russian crude was selling at an average price of $74 a barrel in the weeks after the EU price cap kicked in, researchers said. This is lower than expected and suggests that sanctions have had a more minimal effect on supply than anticipated.
By Peter Nurse, Investing.com reported that oil prices slipped lower Monday, weighed by a stronger US dollar and continued concerns that rising virus cases could lead to more lockdowns, hurting demand.
Here are some notable charts to monitor in commodities markets over the coming days:
• Gold: Gold has been in a strong uptrend, but the US dollar has been in a strong uptrend as well. Investors should watch how these two forces move against each other in the coming weeks.
• Oil: Oil prices have been volatile in recent weeks due to supply and demand issues, as well as geopolitical tensions. Investors should watch how these factors impact oil prices in the coming days.
• Grains: Grains have seen a rally in recent weeks, but it could be vulnerable to changing macroeconomic conditions. Investors should watch how this market develops in the coming weeks.
• Livestock: Livestock prices have been volatile in recent weeks due to changing supply and demand dynamics. Investors should watch how these conditions develop in the coming days.
• Metals: Metals have been in a strong rally in recent weeks, but this could be vulnerable to changing macroeconomic conditions. Investors should watch how these markets develop in the coming days.
In summary, commodities markets appear to be in turmoil as the US dollar index continues to rise and several factors are coming into play with grains, livestock, metals and other commodities. Tightening monetary policy, Europe's energy crisis, and China's COVID-19 lockdowns have all contributed to a risk aversion in the economy and have caused significant pressure in the commodities markets. Investors should watch how these conditions develop in the coming days.
