Upward trend persists in commodity markets last week

By Burhan Sansarlioglu

ISTANBUL (AA) – Commodity markets saw the previous week’s upward trend persist last week amid geopolitical risks and supply concerns.

Despite the uncertainties regarding the Fed’s interest rate cuts, commodity markets were generally positive.

The Fed’s interest rate decision was the focus of the markets, and although it is certain that the bank will leave its rates unchanged at the March meeting, Fed Chairman Jerome Powell’s statements may have an impact on the course of commodity markets, according to analysts.

- Precious metals up except for gold

Gold prices fell after the US inflation data reduced the possibility that the Fed will cut interest rates soon.

The Producer Price Index (PPI) in the US exceeded the estimates after the Consumer Price Index (CPI) went above February forecasts.

The CPI increased 0.45% month-on-month in February, exceeding the market forecasts with a hike of 3.2% year-on-year.

Meanwhile, the PPI rose 0.6% month-on-month and 1.6% year-on-year in the same month, also above expectations.

As for the Core PPI, including volatile food and energy prices, it outperformed estimates, climbing 0.3% on a monthly basis and 2% year-on-year in the same period.

Silver prices went up as copper prices rose and the US manufacturing industry’s production exceeded expectations in February, as it soared 0.8%, though the expectation was that it would rise only by 0.3%.

The increase in precious metal prices is also influenced by the ongoing geopolitical tensions in the Middle East.

Palladium prices were influenced by expectations that China would introduce further stimulus measures to support the country’s economic growth.

In light of these developments, the ounce price of gold lost 1%, whereas silver hiked 2.2%, platinum 2.6%, and palladium 5.5%.

- Pound price of copper reaches 11-month high

Copper prices rose due to news reports that Chinese copper smelters are planning joint production cuts, limiting the refined copper supply.

Zinc prices also increased as refined zinc production in China fell.

Given these circumstances, the pound price of copper soared 6%, aluminum 1.7%, zinc 1.5%, lead 2.4%, and nickel 0.4%.

The pound price of copper tested its highest level since April 2023 with $4.12 last week.

- Brent crude oil on rise, natural gas on decline

Oil prices saw an upward trend last week as data indicated strong demand in the US after commercial crude oil stocks in the country fell more than expected.

Commercial crude oil stocks went down by about 1.5 million barrels last week according to data released by the US Energy Information Administration, while the market expectations were that the stocks would increase by 900,000 barrels,

The ongoing geopolitical tension raised the price of Brent crude oil, as concerns that Ukraine’s attack on the largest oil refinery in southern Russia could potentially disrupt fuel supplies to Asia and Europe play a key role in the upward trend seen in Brent crude oil.

As for natural gas, the prices remain under pressure due to mild temperatures and the upcoming spring season in the northern hemisphere.

Considering this news, while the barrel price of Brent crude oil gained 4%, natural gas traded on the New York Mercantile Exchange in British thermal units decreased by 7.8%.

- Agricultural group sees mixed course

France’s Ministry of Agriculture raised its soft wheat stock estimates for the 2023/2024 period from 3.5 million tons to 3.7 million tons, giving rise to wheat prices.

Meanwhile, the International Grains Council raised its global corn production estimates for the 2023/2024 and the 2024/2025 seasons, following high crop expectations for Brazil and China, which also had a downward impact on corn prices.

In view of these developments, wheat traded on the Chicago Mercantile Exchange fell 1.5, corn 0.7%, and rice 0.4%, whereas the price of soybeans was up 1.2%.

Coffee prices rose as coffee stocks fell in Vietnam.

Cocoa prices continued to hit record highs as major cocoa factories in the Ivory Coast and Ghana decided to cut or halt production due to high seed costs.

This news from the two countries that account for 60% of the world’s cocoa production is expected to cause a sharp increase in chocolate prices worldwide.

The decrease in cocoa harvest due to climate conditions pushed chocolate producers to increase prices, and it is estimated that chocolate prices may increase even more sharply with the continuation of the production cut.

In accordance with this news, the price of cotton traded on the Intercontinental Exchange fell 1.9%, and coffee 0.7%, whereas sugar climbed 2.9%.

As for cocoa, its price peaked at $8,816 last week, up 8.3%.

* Writing by Emir Yildirim