Aluminum blocks are seen at the Wagner automobile industry in Gradacac, Bosnia and Herzegovina, February 8, 2022. REUTERS/Dado Ruvic/Illustration
March 4, 2022
By Naveen Thukral
SINGAPORE (Reuters) – Commodity markets were on track for their biggest weekly gains in years on Friday, as the closure of Ukrainian ports and sanctions on Russia prompted energy, crop and metals buyers to seek replacement supplies.
Russia is one of the world’s top exporters of key commodities, from natural gas and crude oil to aluminum and wheat, so the possible ban on supplies from the country due to sanctions has traders and importers in turmoil.
“We see the commodity meltdown continuing with no sign of abating,” ED&F Man Capital Markets wrote in a statement.
Global commodity markets are melting after Russia invaded and sanctioned Ukraine
“More specifically, a massive repricing is taking place that is likely to stop when most, if not all, of Russia’s contribution to the global supply/demand commodity chain is ‘wiped’ from the numbers and discounted by the markets.”
The Chicago Board of Trade’s (CBOT) most active wheat contract is up 40% this week, the biggest weekly gain on record, while corn is up 16% and soybeans are up 5%.
Oil prices are set to post their strongest weekly gain since mid-2020, with WTI up 19% and Brent up 16% after hitting their highest levels in a decade this week.
The three-month aluminum on the London Metal Exchange, which hit an all-time high on Friday, is heading for its biggest weekly gain on record.
Nickel hovered near a seven-year high, with prices on track for their biggest weekly gain since August 2019.
Benchmark iron ore futures in China posted their biggest weekly gain in more than two years, up nearly 20% on fears of supply disruptions.
Scorching commodity prices are likely to increase inflationary pressures on economies trying to recover from the COVID-19 pandemic and weigh on growth prospects.
Meanwhile, Asian stocks and the euro tumbled on Friday after news reports of a fire near a nuclear facility in Ukraine following fighting with Russian forces fueled investors’ fears of the escalating conflict.
The euro faced its worst week against the dollar in almost two years as the war in Ukraine and the prospect of persistently high commodity prices further weighed on expectations for European economic growth.
Weaker currencies against the greenback are also reducing buyers’ ability to secure commodities, which are mostly traded in US dollars.
(Reporting by Naveen Thukral; additional reporting by Eileen Soreng in Bengaluru; editing by Elaine Hardcastle)
https://www.oann.com/markets-set-for-biggest-weekly-gains-in-years-as-russia-ukraine-war-hits-supplies/?utm_source=rss&utm_medium=rss&utm_campaign=markets-set-for-biggest-weekly-gains-in-years-as-russia-ukraine-war-hits-supplies Markets are expecting their biggest weekly gains in years as the war between Russia and Ukraine hits supplies