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2021 Commodity Boom Halts Amid Wider Selling Context

(Bloomberg) – One of the biggest commodities booms in decades is probably not over yet – it’s just taking a break. Crops, oil and metals are heading for weekly losses after a few nervous days for commodity markets to stocks and cryptocurrencies. Investors were spooked by concerns about inflation, speculation that the US Federal Reserve would ease stimulus measures and other warnings from China about cooling price spikes, but many of the reasons for the surge This year’s awards and debate over a new supercycle remain intact. “The uptrend in commodities is certainly not over yet,” said Eric Liu, head of trade at Chinese copper trader ASK Resources Ltd. “Every country is grappling with rising inflation, but as long as they don’t actually tighten monetary and fiscal policies. , commodity prices can hardly calm down. A rebound in the world’s largest economies as Covid-19 vaccination rolls out fuels demand for metals, food and energy as supplies remain tight, tightening markets for products ranging from petroleum to wood . This trend could intensify over the next few months in the United States and Europe, with more people going out, driving, booking flights and gathering for summer barbecues. And there’s China, which has increased imports of soybeans and corn to feed its growing pig herd.The longer-term outlook for aggressive infrastructure spending and a faster transition to electric vehicles and batteries have also helped raise the prices of commodities. copper futures rebounding from yesterday’s drop on expectations that demand will remain resilient even in the face of a possible decline from the Federal Reserve and increased efforts by China to lower prices of jaw. Corn futures also rose in Chicago, supported by China’s continuing buying frenzy. In contrast, crude futures have prolonged losses in the run-up to a deal to end sanctions on Iranian exports, while the coronavirus continues to hurt Indian demand. The Bloomberg Commodity Spot Index, which tracks 23 commodities, fell 1.8% Wednesday at the minute of the April Fed meeting showed some policymakers were open to a debate on the cut at future meetings. In addition, China has issued a new warning about measures to curb price increases, saying more needs to be done to prevent rising costs from being passed on to consumers. The stronger rhetoric is likely to weigh on consumers. materials ranging from copper to iron ore, which hit record levels this month. on growing demand. China, the main user of raw materials, has also purchased huge amounts of crops, which has helped push grain markets to multi-year highs before the recovery stalls. The factors that helped drive up asset prices have eased, ”said Zhang Chenfeng, a researcher at China’s commodities hedge fund Shanghai Chaos Investment. According to Bob Yawger, head of the futures division at Mizuho Securities, inflationary pressures could limit the rise. “People want to go out and live, and that will put a big supply in the market,” he said in an interview, adding a The dollar could also be a catalyst for rising commodity prices since most of the commodities are valued in the greenback. Western Texas Intermediate crude oil could climb to around $ 70 a barrel in the coming months “as everyone drives as many miles as possible.” With markets looking for new engines to pick up the rally, energy bulls may point to American leadership ahead. and flying seasons with the ease of lockdowns, as well as high demand from Asia. Crops need near perfect weather this summer in the United States and later in Brazil and Argentina for crops to meet global demand, so any bad weather could cause prices to spike. spending, which helped send economic copper above $ 10,700 a tonne at the start of the month. Rising prices depend in part on a clearer picture of infrastructure spending and the duration of loose monetary policies. Wall Street has released a bullish outlook. Citigroup Inc. sees copper surpass $ 12,000 in the coming months and major traders Glencore Plc and Trafigura have said prices could rise much more to boost supply enough to meet future demand for renewables and power plants. electric cars. a healthy break ”for commodities, said Daniel Hynes, strategist at Australia & New Zealand Banking Group. “Any disappointing data or headwinds was always going to lead to profit taking, and I think the industry as a whole still has advantages.” (Updates with commodity movements in 2nd paragraph.) More articles like this are available at bloomberg.com Stay ahead with the most trusted source of business news. © 2021 Bloomberg LP


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