Last week, palladium and platinum prices fell by more than 11% and 7%, respectively, while corn futures lost almost 6% and copper futures 4.8%. Oil prices have also fallen, CNBC notes.
Soybeans have seen this year’s advance wiped out, losing more than 20% from an eight-year high reached in May. And wheat has fallen from multi-year highs. Sugar and even timber prices have also fallen, according to Bloomberg. Business Magazine.-
Growing projections launched by the US central bank for inflation and interest rate hikes could also contribute to the decline in commodities by putting increasing pressure on the dollar.
Declines in other cases are driven by different factors, such as a softening of soybean supply fears and monetary and silver monetary policy uncertainty. Better weather conditions were another factor behind the decline of many agricultural products.
2021 began with considerable increases in raw materials
The declines come after a solid first half of 2021 for raw materials, fueled by growing industrial growth as the US and other economies began to reopen as the number of coronavirus cases decreased.
For industrial metals such as copper or aluminum, prices on international markets have been about 80% and 56% respectively in the last year (until June 7), and it should be noted that the values would have been even higher if prices had not would be corrected from the maximum levels. Steel has been at the center of historic growth in China, especially for hot rolled coils (HRCs), whose prices are more than double the lows of May last year.
Reinforced steel bars, also on the Shanghai Stock Exchange, are now about 50% above last year’s level, after corrections of more than 20% from the peak reached in May.
The “star” of the price increases would be the timber, at almost triple levels in a year, on the US stock market.
However, energy and industrial metals, which benefit from betting that the reopening of economies will fuel demand, are well above the level at the beginning of the year, and some analysts say their rally is unlikely to moderate significantly.
“We believe we are at the beginning of a strong raw materials cycle, similar to the one from the late 1990s to 2018,” Jason Bloom, a strategist at Invesco, told Bloomberg. According to him, supply problems are relatively isolated from the Fed’s statements, and China may influence prices in the short term, but it does not control the markets.
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