Five Commodities to Watch This Week Amid Market Volatility
As global markets continue to experience volatility,
there are five key commodities to watch this week due to significant price changes and economic shifts.
From gold approaching new record highs to a coffee shortage driving up Arabica prices,
these commodities present both challenges and opportunities for investors. Here’s a closer look:
Topic
Coffee
Coffee markets have seen notable fluctuations this year,
with the price of premium Arabica beans rising sharply due to a shortage of the cheaper Robusta beans.
This shortage has forced coffee companies like Starbucks to rely more on Arabica,
pushing its prices up by over 30% this year.
Concerns about production in Brazil, the world’s largest coffee producer,
add to market uncertainty, as dry weather has affected the expected crop size.
Palm Oil
Palm oil stocks in Malaysia, the world’s second-largest producer,
have increased, putting downward pressure on prices.
Stocks rose by 4.4% in June compared to the previous month, reaching their highest level since February.
This surplus led to the largest weekly loss for palm oil futures in Kuala Lumpur since mid-April,
as they competed with abundant soybean oil supplies from South America and the United States.
Gold
Gold is nearing new record highs as investors bet that slowing inflation will lead to U.S. interest rate cuts.
Spot gold prices recently approached $2,450.07 per ounce,
supported by economic data indicating potential rate cuts.
This year, gold has risen by 16%, bolstered by strong central bank purchases
and increased demand from investors, particularly in China.
Oil
Oil market volatility has reached its lowest level since June 2015,
due to ongoing geopolitical tensions and concerns about slowing economic growth.
Brent crude futures have been trading within a $15 per barrel range since February,
reducing the demand for protective options.
Implied volatility for Brent, a key metric for option pricing,
has fallen to its lowest level in nine years for the second consecutive month.
LNG
(Liquefied Natural Gas)
President Joe Biden’s freeze on new LNG licenses has reduced the U.S.’s ability to secure new deals,
compared to the surge in long-term agreements following Russia’s invasion of Ukraine.
Building LNG export projects requires massive investments,
often reaching billions of dollars, and relies on securing long-term contracts to attract financing.
The future of U.S. LNG exports to major markets in Europe and Asia will depend on political will
and the outcome of the upcoming U.S. elections.
These five commodities play a crucial role in shaping the global economic landscape,
and monitoring their developments will be essential for understanding market shifts
and making informed investment decisions.
Five Commodities to Watch This Week Amid Market Volatility