A farmer collects grain with a combine harvester during wheat harvest on a farm near Benfleet, England, Monday, August 12, 2024.
Bloomberg | Bloomberg | Getty Images
Since the beginning of this year, the global commodity market has been highly volatile and prices have risen sharply.
orange juice and cocoa Futures soar to record highs in first half crude Oil Prices fluctuate with headlines from the Middle East. gold price Continued to rise, but prices of base metals such as iron ore fell sharply.
Sabrin Chowdhury, director and principal, said: “Until now, commodity markets have been sentiment-driven and fickle, constantly looking for the slightest glimmer of hope to reach new highs, only to be disappointed by the slightest hint of possibility. And collapse.
this S&P Goldman Sachs IndicesAs a benchmark for overall commodity market performance, April rose 12% from the beginning of the year, before gradually slowing to a year-to-date gain of 2.18%.
According to data obtained by FactSet, the commodities with the biggest gains so far this year are a selection of soft goods, including cocoa, eggs, orange juicerubber and coffee.
Analysts told CNBC that these commodities have rallied strongly due to bad weather in key producing areas.
Biggest winner
cocoa
Cocoa has led the way, with prices up 66% so far this year, with April cocoa futures soaring to a record high of $11,722 a ton due to a shortage of cocoa beans. Heavy rains and disease in major producers Côte d'Ivoire and Ghana have disrupted supplies.
Darren Stetzel, senior vice president of Asian soft commodities at brokerage firm StoneX, said that attracted by profit opportunities, hedge funds have poured into the market, causing price movements to become more volatile.
Although prices have retreated from record highs, cocoa futures remain above typical levels, with the September contract on the US Intercontinental Exchange last trading at $9,150 per ton.
Stetzel said the cocoa market will stabilize heading into 2025 as weather conditions improve in West Africa, although he noted prices will slowly return to levels seen before this year's surge.
Egg
Avian influenza has recently resurfaced in poultry facilities across the country. us, Japan Egg prices in the United States and other countries have risen more than 62% since the beginning of the year, FactSet data shows. The current spot price for a dozen large white eggs is $3.57, FactSet said, citing data from the U.S. Department of Agriculture and Commodity Research Service.
So far this year, approximately 18.5 million laying hens in the United States have been affected by avian influenza. On the demand side, consumers are also relying more on eggs as a more affordable source of protein, said Karyn Rispoli, executive editor of market intelligence platform Expana.
Tim Luginsland, sector manager at Wells Fargo's Agri-Food Research Institute, said wholesale egg prices are expected to rise as fall and the holidays approach, especially if highly pathogenic avian influenza infections persist.
orange juice
ICE orange juice futures surged to record levels in May and are currently hovering near a record high of $4.49 a pound. Florida production declines Major producers of orange juice in the United States – over climate driven Bad weather in Brazil's main orange-producing regions has thrown the industry into crisis mode.
Orange juice is sold at a grocery store in Chicago, Illinois, on February 13, 2024.
Scott Olson | Getty Images News | Getty Images
And that's unlikely to change anytime soon. Global orange juice production will decline in the fifth quarter due to the following reasons Brazilian production continues to declineaccounting for 70% of global production.
“Given the expected production of next season's orange crop, orange juice prices are expected to remain high for at least the next 12 months,” said David Branch, sector manager at Wells Fargo's Agri-Food Research Institute.
eraser
Rubber prices have soared nearly 30% since the start of the year as output fell in Thailand and Indonesia, the world's largest natural rubber producers. Weather-related issues such as limited rainfall.
September contract Benchmark Ribbed Cigarette Paper Grading (RSS3) Rubber futures on the Osaka Stock Exchange are currently trading at 337 yen ($2.29) per kilogram.
coffee
BMI's Chaudhry said coffee futures traded on ICE have risen 25% so far this year to $2.45 a pound due to adverse weather conditions in Brazil's southeastern coffee-growing region.
Production challenges posed by El Niño in Southeast Asia have led to lower production in key producing areas such as Vietnam and Indonesia. El Niño is a weather phenomenon that brings rising temperatures and more extreme weather conditions. Usually lasts 9 to 12 months.
biggest loser
iron ore
Iron ore prices fell the most among commodities as China's property industry continues to slump, leading to weak demand. Vivek Dhar, head of mining and energy commodities research at Commonwealth Bank of Australia, said the deterioration in profit margins at the country's steel mills was an important driver of iron ore prices and a factor that was driving prices down. Iron ore is a key component of steel.
Benchmark 62% iron ore for the contract expiring on August 30 on the New York Mercantile Exchange last traded at $98.10 a tonne.
On June 8, 2024, a worker welded steel in a workshop in Hangzhou, Zhejiang Province, China.
VCG | Visual China Group | Getty Images
“The main drag on China's steel consumption remains the real estate industry (which accounts for about 30% of China's steel consumption),” Dahl said in a recent report.
He added: “With steel mill profit margins currently at levels that severely inhibit production, the market has reason to worry that iron ore prices may remain below $100/tonne in the short term.”
cereals
In what appears to be a bumper year for the northern hemisphere, widely consumed grains such as wheat, corn and soybeans have also fallen sharply.
“The global grain industry is currently overstocked due to successive bumper harvests in all major grain-producing regions,” Wells Fargo's Luckinsland said. As a result, more corn and soybeans are flooding into export markets, driving down prices.
So far this year, Chicago Board of Trade wheat and corn trading volumes are down nearly 15%, while soybean trading volume is down nearly 25%.
Notable Mention
gold
Gold prices have risen to record highs this year, driven by expectations of U.S. interest rate cuts and the metal's appeal as a safe-haven asset. Gold futures recently hit another record high, reaching $2,549.9 per ounce.
Despite the volatility so far this year, global commodity markets remain elevated and expected to remain so, BMI's Chowdhury predicts.
Gold Investments Ltd. Gold bullion trader's selection of gold bars and one ounce coins in London, UK on Tuesday, May 21, 2024.
Chris Ratcliffe | Bloomberg | Getty Images
“We expect prices to be supported by a weaker U.S. dollar, especially if the Federal Reserve begins to cut interest rates later this year,” she said. The analyst added that continued weak demand from China will limit price increases for most commodities, industrial Metals are expected to fall further.
Additionally, StoneX's Stetzel said global weather patterns are expected to shift from El Niño to La Niña by the end of the year, which could be a critical event for global agricultural markets. La Niña typically has a cooling effect on global temperatures And it happens every three to five years.
“That means the weather conditions we saw last year will be completely opposite to what we expect in 2025,” he said.