Drought concerns, geopolitical risks dominated commodity markets in July
Precious metal prices up due to recession concerns while grain prices soar following Russia's withdraw from grain deal
By Burhan Sansarlioglu
ISTANBUL (AA) - Supply risks, especially due to the Russia-Ukraine war, and drought concerns as temperatures reached record highs have set commodity markets on an upward trend.
The El Nino climate pattern also triggered continued concerns in commodity markets in July.
Analysts reported that as recession concerns gained strength, demand for the dollar fell and demand for products traded in commodity markets rose, while concerns about supply also triggered rises in commodity prices.
The Chinese government's continued steps to support various areas of the economy also fed investors' risk appetite.
Geopolitical risks and recession concerns especially pushed precious metals upwards.
Last month, the price of gold gained 2.4%, silver 8.7%, platinum 5.6%, and palladium 4.5%; analysts said the demand for gold rose amid growing concerns of a recession.
Analysts said predictions the Fed may end its "hawkish" interest rate steps increased the price per ounce of gold.
China's gold consumption jumped 26.4% in the first half of the year on an annual basis.
Base metals rallied amid expectations that China will increase incentives.
The possibility of power outages for metal producers due to record high temperatures in China's Sichuan province also raised supply concerns for base metals.
The price of copper rose 6.9%, aluminum 4.5%, zinc 7.6%, lead 0.6%, and zinc 7.6%.
A mixed course was seen in energy commodities.
Brent oil gained 13.6% in July, while natural gas fell 5.7%.
Saudi Arabia stated that it will extend its one million barrel supply cut to August.
Russia announced that it will reduce its daily oil supply by 500,000 barrels and Algeria by 200,000 barrels.
The International Energy Agency (IEA) said oil supply may lag behind demand in the coming period.
Several oil fields in Libya were shut down following protests, while Shell suspended crude oil loading at Nigeria's Forcados terminal due to a pipeline leak.
Recent developments indicate that production in oil markets will be tighter in the coming months.
Agricultural commodities also rose sharply last month: the price of wheat rose 2.3%, corn 3.7%, and rice 3.2%, while soybeans lost 0.9%.
Cotton gained 5.4%, sugar 5%, cocoa 5.8%, and coffee 3.6%, while cocoa hit its highest level since March 2011.
The end of the Black Sea grain corridor agreement plus Russian attacks on Ukraine's Odesa region, targeting port infrastructure on the Danube River, had an upward impact on grain prices.
*Writing by Gokhan Ergocun
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