Commodity markets boom with strong gains last week

ISTANBUL

Commodity markets continued their positive trend with strong gains last week as expectations of a 50 basis point rate cut by the Fed gained traction, while bond yields and the US dollar index retreated.

Former Federal Reserve official William Dudley said there was likely room for a 50-basis-point rate cut at the bank’s meeting last week, while expectations for a 25-basis-point rate cut are equally likely in money markets.

The Federal Reserve’s monetary policy decision to be announced this week and future statements by Fed Chairman Jerome Powell will be the priority, analysts said.

Meanwhile, the US 10-year bond fell 7 basis points to 3.65%, while the US dollar index declined 0.1% to 101.1.

Precious and base metals rise across the board

In the United States, the number of people filing for first-time unemployment benefits rose by 2,230 last week, slightly above market expectations.

The slowdown in the US labour market supported the expected dovish measures by the Fed, while interest rate cuts by the European Central Bank (ECB) positively influenced precious metal prices.

Silver prices rose 9.9% last week after Democratic presidential candidate Vice President Kamala Harris said she is committed to diverse energy sources to reduce foreign dependence.

Meanwhile, palladium and nickel prices rose 17% and 0.3% respectively as Russian President Vladimir Putin said he might impose export restrictions on some products.

Platinum prices rose 8% last week after the World Platinum Investment Council’s quarterly report was released, which said a deficit of 1 million ounces of platinum is expected in the second quarter.

In China, declining copper stocks in Shanghai Stock Exchange warehouses indicated stabilizing demand, while production in Chile declined, leading to a 4.1% price increase.

Aluminium stocks also fell in China, while strong demand for renewable energy, which caused a supply squeeze, pushed aluminium prices up 5.5% last week.

In the energy sector, the price of a barrel of Brent crude oil rose 0.5% last week as production was disrupted in the Gulf of Mexico due to Hurricane Francine, which caused flash flooding and tornadoes and recently became a Category 2 storm.

According to the International Energy Agency, OPEC crude oil production fell 70,000 barrels per day month-on-month to 27.3 million barrels, raising supply concerns.

Hurricane Francine also negatively impacted natural gas production in the Gulf of Mexico, according to a statement from the U.S. Bureau of Safety and Environmental Enforcement, causing prices to rise by 0.8%.

Meanwhile, sugar prices rose 2.7% last week amid recovering oil prices and expectations of sugar demand.

Estimates of lower coffee production in Brazil due to the La Niña weather phenomenon, as well as drought in Vietnam, caused coffee prices to soar by 9.9%.

Cocoa prices rose 8.7% per tonne last week as concerns over West African production and continued rising global demand persisted.

At the same time, the price of a bushel of wheat rose 4.9%, corn 0.7%, soybeans 0.1% and rice 1.2% last week on the Chicago Mercantile Exchange.

On the Intercontinental Exchange, the price of a pound of cotton rose 3.7% over the same period.

*Written by Emir Yildirim

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