Selling pressure in the commodity market continues with ongoing strong economic activity in the US increasing demand for the dollar and predictions that the US Federal Reserve (Fed) may continue to increase Interest rates.

The downward trend in the commodity market continued last week.

Last week, expectations that the debt limit could be raised in the US, weekly jobless claims fell more than expected, the Philadelphia Fed’s manufacturing index beat expectations, and yields rose. of the bonds strengthened the dollar.

Selling pressure in the commodity market continues with strong economic activity in the country increasing demand for the dollar and predictions that the Fed may continue raising interest rates.

Although the slowdown in the labor market and inflation in the US, which is not at the desired level, fuel uncertainties about the Fed’s future monetary policies, the international risk rating agency Moody’s affirmed that the Fed is expected to keep your monetary policy tight. policy until the end of the year, lowering the interest rate, and said he believed it was unlikely to lower it until early next year.

Verbal guidance from Fed officials also continues to be effective. Atlanta Fed President Raphael Bostic said they have made good progress in terms of inflation and he expects inflation to be around 3 percent by the end of the year. Noting that he tends to pause rate hikes in June, Bostic noted that the Fed is currently in the most difficult phase of reducing inflation.

Richmond Fed President Thomas Barkin has stated that he sees no barrier to higher interest rates if inflation continues.

While New York Fed President John Williams declared inflation unacceptably high, Chicago Fed President Austan Goolsbee said he had made no decision by the June meeting and it was too early to tell. discuss rate cuts.

After these developments, expectations that the Fed would not change the policy rate next month remained strong in pricing in money markets.

If the US debt ceiling crisis is overcome, the forecast that the government will increase bond sales to meet its cash needs increased selling pressure in bond markets, while the 10-year yield The US ended the week up approximately 21 basis points at 3.6830.

GOLD PROVEN 1.5 MONTHS LOWER

An ounce of gold, which last week tested its lowest level in the past 1.5 months at $1,952, closed the week at $1,978, 1.6 percent below its previous close. Analysts said that uncertainties regarding monetary policy and rising bond yields suppressed the price of an ounce of gold.

Silver was down 0.5 percent last week, while platinum was up 1.1 percent.

The World Platinum Investment Council has forecast that global demand for platinum will rise 38 percent this year.

Last week, base metals were also dominated by a downtrend. While copper closed the week flat, lead lost 1.4 percent, nickel 5.7 percent and zinc 1.8 percent. Aluminum, for its part, rose 2.9 percent.

While the base metals index on the London Metal Exchange fell 30 percent from its 2022 peak, uncertainty about the Chinese economy was claimed to be the main factor.

Zinc is being phased out in anticipation of a strong recovery in supply this year after a prolonged smelting bottleneck in 2022. The International Lead and Zinc Working Group (ILZSG) reported that the global zinc market was in excess supply of 44 kilotons in the first three months of the year.

ENERGY PRODUCTS

Wildfires in Canada drive up Brent oil and gas prices

Last week, Brent crude rose 2.3 percent and natural gas traded on the New York Mercantile Exchange rose 14.1 percent.

US oil purchase plans for the Strategic Petroleum Reserve (SPR) and wildfires in Canada triggered supply concerns and resulted in higher Brent oil prices.

The US administration announced that it will buy up to 3 million barrels of crude oil for delivery in August for the strategic oil reserve, and new purchases will be made for the Big Hill Strategic Oil Reserve in Texas.

US President Joe Biden allowed the release of more than 180 million barrels of oil from the country’s strategic oil reserves in March of last year amid rapidly rising gasoline prices in the United States. United after the Russian war in Ukraine.

News is flowing that wildfires that began on May 6 in the western Canadian province of Alberta and then spread to the British Columbia region have shut down production of at least 319,000 barrels. oil equivalents, which corresponds to 3.7 percent of national production. , also raised supply concerns, causing higher Brent oil prices.

Natural gas prices also rose on the news that the fire in Canada affected the supply of natural gas.

MIXED FARM COMFORT

A mixed course was seen in agricultural commodities last week.

Wheat traded on the Chicago Mercantile Exchange fell 4.7 percent, corn fell 5.1 percent, soybeans 6.1 percent and rice 7.7 percent.

Wheat registered its lowest level since April 2021 at $6.02 and corn at $5.47 since October 2021.

As the extension of the Black Sea Grain Corridor Agreement eased supply concerns, prices of wheat, maize and rice fell.

On the Intercontinental Stock Exchange (ICE), cotton gained 7.6 percent, coffee 4.3 percent, and cocoa 2.9 percent, while sugar fell 1.7 percent.

Decreased global cotton production forecasts led to higher cotton prices.

The Uganda Coffee Development Authority reported that coffee shipments in the country fell to 373,610 bags of coffee in April, down 23 percent monthly and 8 percent annually, due to “early drought.” which affected performance. . Heavy rains also reduced coffee yields in Indonesia. The International Coffee Organization announced that world coffee exports fell 6.4 percent to 62.3 million bags in the January-March period.

Cocoa prices rose last week on concerns about cocoa yields in Côte d’Ivoire.

Analysts said there are reports that the Chinese government plans to extract about 1 million tons of sugar from state reserves, negatively affecting sugar demand. (AA)