Commodity prices on the markets are fluctuating this year

Commodity prices on the markets are fluctuating this year
Commodity prices on the markets are fluctuating this year

Commodity prices on world markets were very volatile in the first quarter, and their decline at the beginning of the year was replaced by an increase in prices in March. Gas, electricity, iron ore, corn and wheat became cheaper the most. On the contrary, the price of sugar, oil and especially cocoa rose significantly. Bloomberg’s main commodity index rose 0.5 percent year-to-date through March 28.

“Commodity markets have been stagnant since the beginning of the year, but the movements are very significant. Even in mid-February, commodities were recording massive losses. However, sharp growth in March canceled out the declines. The markets are pulling oil and cocoa up, on the contrary, natural gas, corn and iron ore are losing,” said XTB analyst Jiří Tyleček.

Lukáš Kovanda: Financial speculation is behind the astronomical rise in cocoa prices


Traders with cocoa beans usually use futures contracts as a hedge against the risk of unwanted movements in the price of the beans. These merchants, who have beans in stock and others growing on plantations or being harvested for them or their suppliers, understandably hope that the price will go up. At the same time, however, they are now securing themselves in case the price of beans falls. They hedge by speculating on a drop in the price of beans. This is how they speculate using futures contracts.

Lukáš Kovanda

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According to him, the price of Brent North Sea oil rose by 12.5 percent this year. Texas WTI crude oil even added 14.5 percent. This growth is primarily due to geopolitical tensions. At the same time, the market feels the tight taps of the OPEC+ organization. Wholesale fuel prices in Rotterdam are also rising. The price of diesel fuel added eight percent and the price of gasoline increased by 25 percent.

The prices of other energy commodities, however, no longer developed quite unambiguously. The price of the annual gas contract in the Netherlands, which determines the price development for end customers, is falling by 21 percent this year. The price of electricity on the Leipzig stock exchange for delivery next year is falling by 11 percent this year. The price of coal in Rotterdam with delivery this year is rising by seven percent. Even during February, however, coal recorded a loss of more than ten percent.

Diversity of development on metals

In the group of industrial metals, aluminum fell the most. Its price is falling by 3.6 percent this year. The price of nickel has stagnated this year. On the contrary, the price of copper started to rise. This metal is growing by 3.5 percent since the beginning of the year. Investors are increasingly betting on economic recovery in China. However, iron ore is still showing losses, with a drop of 21 percent and steel, down 16 percent in China. These declines are related to the uncertain outlook for the real estate sector there.

The price of gold rose by about six percent in the first quarter of this year, Golden Gate analyst Pavel Ryba said. According to him, the price is driven up by strong retail demand and record purchases by central banks. Silver has risen in price by three percent since the beginning of the year. The price of platinum fell by almost a tenth. Similarly, palladium fell this year, losing ten percent.

“In the group of agricultural commodities, cocoa is the unequivocal star,” pointed out Tyleček. Its price has increased by 137 percent this year. These are the biggest gains for globally traded commodities this year. Just last month, cocoa was trading at half the price. The price of sugar rises by 8.5 percent due to drought in India and Brazil. And cotton is also doing well, adding 13 percent. The price of coffee is stagnant this year. Of all the commodity groups, cereals are not doing well so far in 2024. Wheat is down 12.5 percent, corn is down 9.3 percent and soybeans are down eight percent.

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The article is in Czech

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