Commodities Report: February 28 — Mar 4, 2022
As the market enters into the last month of Q1 of 2022, the rising rate of inflation and the commodity super cycle that characterized 2021, continues to drive the market in 2022 — a stretch that surpasses the two previous super cycles of 1970 and 2000.
Cash injection into the commodities market has been profound, since the start of the year. This is accompanied by the Russia-Ukraine crisis which has fired up the prices of commodities — a third global-wide factor that will continue to determine the traders’ path.
Russia is a major player in the oil producer, including Uranium aluminum, tin, copper, lithium, palladium, wheat, corn and others. The sanctions imposed on Russia as a consequence of the war are expected to further tighten the supply chain for commodities and steam up existing inflationary pressures.
One of such sanctions is the freezing of Russia’s Nord Stream 2 Baltic Sea gas project by Germany on Feb 22, 2022.
Table 1. Some commodity price gain the last year
Macro-events to watch out for;
The March 4 2022, Non-farm payroll report for February.
The release of the Gross Domestic Product for the U.S. Virgin Islands (USVI), 2019 and
Fed Chair’s testimony before the congress on geopolitical risk and monetary policy actions.
Event Highlights
Codelco Chief Executive reports that cash cost increased 26% to $1.327 per pound of the metal.
Year-on-year oil price more than doubles.
Goldman Sachs expects the price of commodities to rally due the political and economic sanctions imposed on Russia.
Oil price was forecasted to hit $100 mark in December 2021. However, that did not pan out as the case as prices stabilized at sub-$100 levels, closing the year at $75.33/bbl for WTI.
Brent crude is currently at $100.61 while WTI crude is at $94.76 per barrel triggered by Russia’s invasion of Ukraine.
Commodity ETFs at 52-Week high.
Definition of Terms
Commodity Super Cycle is when commodities trade above their long-term price trend over a long period.
Codelco is a Chilean copper mining company.
Cash costs, in mining, are the costs of production, at site level, per unit of output. It includes transport, refining and administration costs and royalties and excludes non-cash costs such as depreciation and amortisation.
Fed twelve members — the seven members of the Board of Governors of the Federal Reserve System
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