Selling pressure in the commodity market

Selling pressure in the commodity market

In the commodity market, a downward trend prevailed last week. After Fed Chairman Jerome Powell signaled that the loosening of monetary policy would be later than market expectations, other Fed officials also made statements approving Powell, increasing the selling pressure on the commodity market.

Fed Board Member Adriana Kugler noted that the cooling of inflation and labor markets may make an interest rate cut appropriate, and that it may be appropriate to keep the policy rate constant for a longer period of time if the decline in inflation pauses.

Boston Fed President Susan Collins emphasized that more data is needed before supporting the interest rate cut and stated that it would be appropriate to start loosening monetary policy before the end of the year.

Richmond Fed President Thomas Barkin also noted that patience is needed to overcome inflation and underlined that it remains to be seen whether more inflationary pressure will come.

Atlanta Fed President Raphael Bostic said inflation is making good progress, but there is still a long way to go.

Dallas Fed President Lorie Logan also stated that he did not see any urgency to adjust interest rates and that confidence in inflation should be established.

IT EXCEEDED THE PRICE OF PALLADIUM FOR THE FIRST TIME SINCE 2018

Looking at precious metals, last week the price of an ounce of gold decreased by 0.7 percent, silver by 0.2 percent, platinum by 2.1 percent, and palladium by 9.2 percent.

In the USA, signs that economic activity remained strong caused the selling pressure to strengthen in the bond markets, while gold also decreased on a weekly basis due to the effect of rising bond interest rates.

The price of platinum exceeded the price of palladium for the first time since 2018. Platinum completed the week at $877.10 and palladium at $862.84.

Palladium prices continued their decline with predictions that the supply would be stable and the demand would continue.

There was also a downward trend in base metals. The week ended the week with a loss of value of 3.4 percent in copper, 4.2 percent in lead, 0.9 percent in aluminum, 1.4 percent in nickel and 6.4 percent in zinc.

The inflation announced in China and the decrease in industrial production in Germany revealed the decrease in demand for base metals.

In China, the Consumer Price Index (CPI) for January decreased by 0.8 percent on an annual basis, and the Producer Price Index (PPI) decreased by 2.5 percent. Germany’s industrial production decreased by 1.6 percent on a monthly basis in December, more than expected.

While the price of Brent oil increased by 5.6 percent last week, natural gas traded on the New York Mercantile Exchange lost 10.5 percent in value.

While the developments in the Middle East were closely followed, the news flow that Israeli Prime Minister Benjamin Netanyahu would reject a possible ceasefire caused the risks in the region to increase again and supported oil prices upwards.

The US Energy Information Administration (EIA) announced that gasoline stocks in the USA, the world’s largest oil consuming country, decreased by more than 3 million units. The decrease in gasoline stocks, indicating that the demand appetite in the country continues, was another factor that caused the increase in Brent oil prices.

A MIXED COURSE WAS OBSERVED IN THE AGRICULTURE GROUP

Last week, a mixed trend was observed in the agricultural group. Last week, the price of wheat traded on the Chicago Mercantile Exchange decreased by 0.3 percent, corn by 3.1 percent, soybeans by 0.4 percent, and the price of rice increased by 2.6 percent.

Concerns about demand along with the increase in the dollar index affected wheat and corn prices downwards.

While cotton traded on the Intercontinental Exchange gained 3 percent, cocoa 11.8 percent, sugar 0.4 percent, coffee lost 0.4 percent.

Cocoa reached a record level of 5 thousand 798 dollars per ton.

Cocoa prices continue to reach their peak due to concerns that the cocoa deficit will increase further from now on. Despite concerns about the Chinese economy, cotton consumption continues to be intense in the country, causing cotton prices to increase.

Sugar prices were supported by the fact that Safras & WWN, one of the leading organizations providing consultancy services in the agricultural sector in Brazil, reduced its sugar cane crushing forecast for 2023/2024 from 670 million tons to 650 million tons.



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