The rise in the commodity market continued last week

The commodity market continued its bullish trend last week. Despite the dilemma of inflation and recession, political uncertainties regarding major central banks, and “hawkish” rhetoric from officials, the demand side of the commodity market remained strong last week. .

The US Federal Reserve (Fed) left the policy rate at 5.00-5.25 percent. As of Wednesday, the Fed suspended interest rate hikes that it had been carrying out for 10 meetings. The Fed statement indicated that the latest indicators point to economic activity continuing to grow at a moderate pace.

In his speech after the meeting, Fed Chairman Jerome Powell said almost all Fed officials believe some additional rate hikes this year would be appropriate to bring inflation down to 2 percent over time.

The European Central Bank (ECB) raised its three main official interest rates by 25 basis points last week. The ECB, which raised interest rates for the eighth time in a row as part of the fight against high inflation, has signaled that it will continue to raise interest rates in the coming period.

The monetary stimulus and the decline in demand for the dollar in China last week were some of the main reasons for the bullish movements in the commodity market. The Bank of Japan (BoJ), which did not change its ultra-loose monetary policy, also contributed to the rise in the commodity market.

The Bank of England (BoE) interest rate decision to be announced this week and remarks by Fed Chairman Powell are also expected to have an impact on commodity markets.

PALLADIUM PRICES RISE

Gold fell 0.2 percent, silver 0.4 percent and platinum 2.6 percent last week, while palladium gained 6.7 percent.

One of the factors putting pressure on precious metals was when Fed Chairman Powell said after the policy meeting that “almost all Fed officials believe that some additional rate hikes this year will be appropriate for reduce inflation to 2 percent over time.”

Palladium rallied on concerns about Russia’s exposure to London Metal Exchange bans, near-term supply concerns and supply tightness in South Africa. Palladium, which is one of the commodities hardest hit by commodity market recessionary concerns, said that although there is a short-term recovery, ongoing recessionary concerns may affect prices.

Stating that silver gained about 3 percent compared to the start of the month despite depreciating on a weekly basis, analysts said: “It may be too soon for palladium’s uptrend to continue.” she used the phrase.

Meanwhile, silver, which rallied above $24 last week, is estimated to see $25-26 levels.

INCREASE IN THE NICKEL MARKET

As for base metals, copper rose 3 percent, lead 6.2 percent, aluminum 0.2 percent, nickel 9.5 percent and zinc 3.1 percent. last week.

Interest rate cuts in China triggered the rises, especially in the nickel market.

Zinc prices rose last week on news that Swedish mining company Boliden will halt production at its Irish zinc mine within the next month due to “unsustainable financial losses”.

POSITIVE TRAINING IN ENERGY COMMODITIES

Brent oil ended the week up 1.8 percent, and natural gas traded on the New York Mercantile Exchange rose 16.2 percent.

The US Energy Information Administration reported that US commercial crude oil inventories rose by about 7.9 million barrels the week prior to 467.1 million barrels. The market expectation was that inventories would decrease by 1 million 291 thousand barrels.

The resurgence of wildfires in Canada has also raised concerns about oil and natural gas production.

WHEAT AND CORN RISE HARD

Wheat traded on the Chicago Mercantile Exchange last week rose 11.3 percent and corn 12.7 percent, while soybeans fell 3.2 percent and rice 6.5 percent.

On the Intercontinental Stock Exchange (ICE), cotton fell 2.1 percent and coffee 3.2 percent, while sugar gained 2.4 percent and cocoa 1.9 percent.

Cocoa hit its highest level since December 2015 at $3,271.

According to the International Grains Commission (IGC) report, world wheat production estimates decreased by 4 million tons compared to the previous month and were made at 783 million tons, while the estimate of stocks at the end of the period decreased by 6 million tons compared to the previous month and became 271 million tons.

On the other hand, weekly corn exports in the US decreased compared to the previous week and stood at 1.24 million tons. Mexico and China were the biggest buyers.

Since corn is one of the raw materials used for the production of biodiesel, corn prices took an upward momentum after the significant increase in oil prices.

In coffee, Fitch Solutions’ expectation of an excess of 7 million bags in the 2022-2023 season and the United States Department of Agriculture’s forecast of an excess of 8 million bags in the 2022-2023 season made that coffee prices move in a downward trend.

Concerns about the El Niño weather event weighed on agricultural commodities, but recession concerns were also seen last week.

While there was a surge in the sugar market as the Brazilian real appreciated against the dollar, news that cocoa deliveries fell to Côte d’Ivoire and cocoa exports from Nigeria fell highlighted concerns about the cocoa supply.