Commodities have received a lot of attention for their gains this year, but as of now, many of them have erased their gains so far this year, and the rest are giving back their gains.
Soybean futures 2021 gains have been wiped out, with current prices down more than 20% from the eight-year highs touched in May, and corn and wheat futures prices have also plunged. At one point Thursday, the Bloomberg Grains Spot Classification Index posted its biggest drop since 2009.
Sharp gains in other commodities such as platinum have also faded, while nickel, sugar and even lumber, which once soared, have slumped.
The fact that some varieties are falling while commodities such as crude oil and tin are rising underscores the uneven response of individual varieties to the reopening and growth of the economy.
While some raw materials are rising on strong fundamental demand, others are facing their own unique headwinds that make it difficult to rise. Soybeans, for example, face easing supply concerns, while gold and silver face monetary policy uncertainty.
The Federal Reserve signaled a rate hike this week, the dollar strengthened, and China tightened its regulation of commodities, a series of events that have hit some raw material prices.
The National Development and Reform Commission recently said that it will soon put in national reserves of copper, aluminum and zinc, this time for mid- and downstream enterprises, with open bidding, and will work with relevant market departments for some time in the future, depending on market changes, to carry out multiple batches in a timely manner to increase market supply and promote the return of prices to the normal range.
Michael Cuoco, head of metals and bulk materials sales at StoneXGroup hedge fund, said.
“The Fed’s tough rhetoric has made risk aversion the primary key issue. Central bank stimulus helped markets build energy during the 2020 epidemic, but now there is a shift in macro movements.”
Even some assets that initially clearly benefited from the reopening of the economy are now retreating, with copper prices threatening to record their worst week of performance in more than a year this week.
Commodity prices have fallen recently as futures contracts have been extended and commodities have seen large spot premiums, along with the presence of seasonal factors, while improving weather conditions have made it difficult for prices to rise for many agricultural commodities.
Chicago soybean futures rallied more than 2% on Friday, but are still on track to fall more than 11% for the week, the worst performance in seven years.