2020s commodities boom
The 2020s commodities boom refers to the rise of many commodity prices in the early 2020s following the COVID-19 pandemic. The COVID-19 recession initially made commodity prices drop, but lockdowns, supply chain bottlenecks, and dovish monetary policy limited supply and created excess demand causing a commodity super cycle rise.[1]
The
The previous commodity super cycle was the 2000s commodities boom, which was attributed to emerging markets, especially that of China, providing a high demand for raw materials.
Food
Global food shortages already
Turkey and the United Nations brokered the Black Sea Grain Initiative between Russia and Ukraine, allowing the controlled export of grain through the Port to the Black Sea, though shipments have yet to reach prewar levels.[6]
Natural gas is in most fertilizers, and fertilizer prices rose due to the Russia–European Union gas dispute, contributing to the food crises.[7]
Oats
Hectares of oats are down in North America[clarification needed] along with droughts in the United States is limiting supply. Demand is up around the world for oats and 38.5% in one year for East Asia.[8][9]
Orange juice
Orange juice prices have been close to an all-time high in 2022 because of Hurricanes Ian and Nicole. Citrus greening disease has been causing damage to citrus trees in the United States since 1998 when it was discovered, dropping the orange production by half. [10][11][12]
Eggs
Rice
India put an export ban on white rice in July 2023, and placed an export tax on parboiled rice exports in August 2023. India is the largest exporter of rice and other counties that export a lot of rice their export prices climbed along with India. Sub-Saharan Africa is expected to feel the biggest impact from the export control measures.[16]
Cocoa
West Africa, a top producing region of cocoa was hit by strong Harmattan winds that lead to drier climates.[17] The region produces 3/4 of all cocoa beans.[18]
Lumber
Lumber prices increased with the hot housing market. Potential new American
Natural gas
Natural gas prices have increased around the world. In Europe,
Natural gas recently became more of a global market with liquefied natural gas and LNG ships maturing in size with Qatar being a world leader in exporting LNG.[24] This globalization of this fungible commodity has caused the prices to shadow each other more in different markets. Previously, natural gas was more difficult to ship, and required pipeline infrastructure, which generally can only be emplaced on land, or for relatively short distances undersea. With the increased use of LNG, gas can be shipped by sea, albeit with the requirement of specialized port facilities.
Piped natural gas
Crude oil and petroleum products
Crude oil prices dropped dramatically during the first months of the COVID Pandemic (
Jet Fuel
Kerosene heating oil #1
Kerosene heating oil was approaching $4 per gallon in March 2022. The EIA stopped reporting the data in March 2022. [28] [29] [30]
Diesel heating oil #2
Diesel heating oil went from around $2 before the pandemic to almost $5 a gallon in 2022. The prices have peaked and are falling in 2022.[citation needed]
RBOB gasoline
Electricity
Electricity prices rose in the United States through 2021 and 2022 mostly from the increase in natural gas prices which makes up the 35% of electricity generated in the United States [34]
The examples and perspective in this article deal primarily with the United States and do not represent a worldwide view of the subject. (November 2022) |
Lithium
The price of lithium carbonate started to rise in 2021 after slumping in 2020 and peaked in early 2022 close to $80,000 per ton. Demand for electric vehicles around the world is the primary cause for the price rise. In 2021, electric vehicle sales doubled to 6.6 million from 2020.[35]
Copper
The price of copper rose through 2021 and peaked close to $5 per pound in Q2 2022 before retreating. Copper demand is expected to double from 25 million metric tonnes in 2022 to over 50 MMT by the year 2035. [36] The pandemic significantly increased the long-term equilibrium volatility of returns in the copper futures market, nearly doubling it.[37]
Nickel
In March 2022
Tin
Prices of
Titanium
Demand for
Rolled Steel
Palladium
Rhodium
South Africa produces 80-90% of Rhodium each year. Russia is the second largest producer of rhodium but it is around 1%. The COVID-19 pandemic in South Africa caused the country to enact lockdown restrictions in March 2020 and again in December 2020 - March 2021. This affected the supply of Rhodium causing the price to increase.[42][43]
Gold
Gold started to increase in price at the start of the COVID-19 pandemic as stocks sunk initially; gold is commonly seen as a safe haven from inflation and stock volatility. Gold crossed the $2,000 mark for the first time in August 2020 and again in March 2022. [44] [45]
Iron ore
China is the number one consumer of iron ore, importing 80% of all internationally traded iron ore. The price has been very volatile because of curbs the CCP has placed on the steel industry to meet emission standards. Australia, Brazil, and China are the top three producers of iron ore. [48]
Cotton
In the Western United States there have been persistent droughts in the 2020s hurting cotton yields among other agricultural products.[49]
See also
- 1970s energy crisis
- 1970s commodities boom
- 2000s commodities boom
- 2021–2023 inflation surge
- Commodity market
- List of commodity booms
References
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- ^ "Global fertilizer exports: How much comes from Russia, Belarus & Ukraine?".
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- ^ Reed, John; Terazono, Emiko; Heal, Alexandra; Joiner, Sam; Clark, Dan; Learner, Sam (April 27, 2022). "How Russia's war in Ukraine upended the breadbasket of Europe". Financial Times. Retrieved August 30, 2022.
- ^ "Black Sea grain exports deal 'a beacon of hope' amid Ukraine war - Guterres". United Nations. July 22, 2022. Retrieved August 30, 2022.
- ^ Weersink, Alfons; Wagner-Riddle, Claudia; von Massow, Michael (August 25, 2022). "The federal government's plan to cut fertilizer emissions will not threaten food security". The Conversation. Retrieved August 30, 2022.
- ^ "Oats in strong demand, so why are hectares falling?". 17 October 2022.
- ^ "Why coffee and oat prices are rising faster than oil's". 22 December 2021.
- ^ "OJ prices are rising: Florida orange production expected to fall to lowest level in over 80 years". KSBW. 2022-12-16. Retrieved 2023-03-02.
- ^ Nosowitz, Dan (2021-02-14). "Researchers Find Possible Answer to Citrus Greening". Modern Farmer. Retrieved 2023-03-02.
- ^ "Asian citrus psyllid - Diaphorina citri Kuwayama". entnemdept.ufl.edu. Retrieved 2023-03-02.
- ^ "FE983/FE983: Impact of Citrus Greening on Citrus Operations in Florida".
- ^ "Researchers Find Possible Answer to Citrus Greening". 14 February 2021.
- ^ "Wholesale egg prices may soon drop to $1 for first time since 2021". CNBC. 27 April 2023.
- ^ "Rice Export Prices Highest in More Than a Decade as India Restricts Trade | USDA Foreign Agricultural Service". 19 September 2023.
- ^ https://www.reuters.com/markets/commodities/cocoa-prices-soar-record-highs-traders-scramble-supplies-2024-02-09/
- ^ https://www.cnbc.com/2024/02/08/cocoa-prices-surge-to-all-time-highs-as-bad-weather-hurts-west-africa-crop-yield.html
- ^ "NAHB Welcomes Biden Administration Move to Lower Lumber Tariffs". 31 January 2022.
- ^ "Lumber prices are set for a shakeup with the rollout of new futures contracts - and a top broker says trading volume could soar 10 times".
- ^ "These are the 5 markets where home sales are cooling fastest: Sellers need to be 'realistic' about price, says broker". CNBC. 15 July 2022.
- ^ "3 charts show Europe's unprecedented natural gas crisis". CNBC. August 2022.
- ^ "Germany is preparing for a rough winter of sky-high energy costs". NPR.org. Retrieved 2022-11-03.
- ^ "Qatar Energy Data, Statistics and Analysis - Oil, Gas, Electricity, C…". Archived from the original on 2012-08-01. Retrieved 2022-08-06.
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- ^ Gaffen, David (24 February 2022). "Analysis: Oil's journey from worthless in the pandemic to $100 a barrel". Reuters.
- ^ "What You Need to Know About Aviation Fuel Prices". 4 May 2022.
- ^ "#2 Heating Oil: The Difference Between Fuel Oils". 20 September 2021.
- ^ "Kerosene prices very high". 5 October 2022.
- ^ "EIA expects most U.S. Households will spend more on energy this winter".
- ^ "4 Factors You Didn't Know About RBOB".
- ^ "What is RBOB Gas?".
- ^ https://commodity.com/energy/rbob-gasoline/
- ^ "Short-Term Energy Outlook - U.S. Energy Information Administration (EIA)".
- ^ "Lithium Price Forecast | is Lithium a Good Investment?".
- ^ "New Study Finds That the Future of Copper is Coming at Us Fast". Forbes.
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- ^ "Nickel market remains at risk of further short squeezes: S&P Global". 31 March 2022.
- ^ "Tin price outlook dims in 2022 – report". 4 January 2022.
- ^ "Raw Steels MMI: Steel Prices Decline Amid Record HRC / Plate Spread". 16 August 2022.
- ^ Patel, Brijesh (3 March 2022). "Palladium hits over 7-month high on supply woes, gold rises". Reuters.
- ^ "3 reasons why rhodium prices have zoomed over 70% since January 1". 8 March 2021.
- ^ "Why the Price of Rhodium is Rocketing to Record Highs in 2021". 17 February 2021.
- ^ "Gold prices are popping as Russia invades Ukraine. Why you may want to resist the rush". CNBC. 24 February 2022.
- ^ "Gold Price Surges Above $2,000 to Highest Level Since 2020".
- ^ "Iron Ore - Monthly Price - Commodity Prices - Price Charts, Data, and News - IndexMundi".
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- ^ "China's Challenge with Iron Ore". 11 July 2022.
- ^ "Cotton Prices Soar as Texas Megadrought Persists".