Commodities Report: Mar 28 — Apr 1, 2022
As the market enters into the second quarter of 2022, the rising rate of inflation, geopolitical risk and the commodity super cycle that characterized 2021, continues to drive the market — a cycle that surpasses the two previous super cycles of 1970s and 2000s.
The bullish trend observed in oil and gas commodities permeated into industrial metals such as platinum, copper, steel, zinc, aluminum and lithium. In extension, some agro-commodities hit an all-time high, including lumber, coffee and wheat across European and US markets.
Macro-events ahead;
U.S. International Investment Position, 4th Quarter and Year 2021.
Personal Income and Outlays, February 2022.
March 2022 CPI data are scheduled to be released on April 12, 2022.
Event Highlights
Nickel is the highest performing commodities, reaching over 250% in a day representing the highest one day upward move in the history of the commodities market
Cash injection into the commodities market has been profound, since the start of the year. This is accompanied by the Russia-Ukraine crisis which fired up the prices of commodities — a third global-wide factor
Brent crude hit $116.15/pb and WTI crude hit $109.48/pb per barrel triggered by Russia’s invasion of Ukraine.
Definition of Terms
Commodity Super Cycle is when commodities trade above their long-term price trend over a long period.
Geopolitical risk are risk associated with terrorist acts, wars and tension between states among others. These factors are exogeneous to businesses. For instance, the Russo-Ukrainian war (2014 till date).
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 sanction is the freezing of Russia’s Nord Stream 2 Baltic Sea gas project by Germany on Feb 22, 2022.
Fed twelve members — the seven members of the Board of Governors of the Federal Reserve System
Redfox Analytica and Global Markets. https://www.linkedin.com/in/redfoxanalytics/
