Sat, Jan 02, 2021 – 5:50 AM
Global commodity markets ended 2020 on a good note, with a pickup in demand and widespread stimulus packages that supported prices after a roller coaster ride caused by the global Covid-19 pandemic.
The deployment of vaccines to fight the virus and billions of dollars in budget support is expected to boost investment and spending in 2021, boosting demand for commodities, from oil to copper.
“It has been a tumultuous year for the commodities market as the oil collapse in March changed the way we measure and assess risk across the commodities sphere,” said Stephen Innes, strategist Chief Global Market Broker Axi, Reuters. “But thanks to the Fed’s unwavering support to pull the US and global economy out of a hole,” commodity markets have prospered, he added.
Dalian iron ore and silver futures are up about 50% in 2020, leading the gains on commodity futures.
Overall, Asian LNG spot prices dominated the power complex, gaining more than 140% in 2020 due to growing demand and blackouts at major suppliers.
Global oil futures fell more than 20% annually, but more than doubled from their 10-year lows reached in April, ending a historic year that marked WTI’s first-ever negative prices benchmark for American crude.
“The resumption of the pandemic will accelerate once a vaccine becomes widely available, further supported by ongoing fiscal and monetary stimulus from governments around the world,” ANZ said in a note. “A strong boost to global growth will likely cause the US dollar to weaken, which is normally a prerequisite for a recovery in commodity markets.”
Vaccine deployments have raised hopes of stronger fuel demand in 2021, with Goldman Sachs forecasting Brent to hit US $ 65 per barrel over the next 12 months. It closed Thursday at US $ 51.80 a barrel in New York.
Dalian Iron Ore and Comex Silver were the top performing major metal futures in 2020.
Iron ore prices have skyrocketed, a combination of booming demand in China and a drop in supplies from the main Brazilian producer.
In precious metals, Comex silver gained 47.9% and Comex gold by 25% following a rush to buy by investors looking for a store of value in a year strong government stimulus and spending by global central banks.
In industrial metals, the London Metal Exchange’s three-month benchmark copper rose 27% in 2020, becoming the best performing in the industry.
Further gains in copper and other base metals are expected in 2021, as the China-led economic recovery spreads to other regions.
“We will see a general surge in metal prices at least in the first half of the year (of 2021). Money continues to flow into the global economy,” said Anna Stablum, commodities broker, Marex Spectron.
In agriculture, Dalian corn futures were the best performing market in 2020, followed by US soybeans.
“I consider the first half of the calendar year to be the best for grain markets,” said Mike Zuzolo, president of Global Commodity Analytics, “and the second half of calendar year 2021 is the best for ranchers so to get the best prices “.
American corn posted the strongest annual gain since 2010 and soybeans gained the most since 2007, as wheat approaches for a fourth consecutive year.
Cattle and pigs ended up at the bottom.
The gains in US corn surprised many traders.
“It was an absolutely unprecedented rally, right down to the teeth of the harvest. I think this is what we will remember the most, how this market hit the lowest contract out there in the second week of August and then turn it back on and never look back, ”said Jeff French, Analyst at Top Third Ag Marketing.
Soybeans, up 41 percent, and palm oil, up nearly 18 percent, were other big winners.
London cocoa has fallen about 5 percent after rising in the past two years.
Raw sugar ended the year up 15 percent and white sugar advanced for the second consecutive year. REUTERS