Strong end for commodities

Overall, spot Asian LNG led the energy complex, gaining more than 140% this year on booming demand and outages in key suppliers. (File pic MISC's LNG tanker Camellia.)

SINGAPORE: Global commodity markets ended 2020 on a strong note, with recovering demand and widespread stimulus packages buoying prices after a roller coaster ride caused by the global coronavirus pandemic.

Roll-outs of vaccines to combat the virus and trillions of dollars’ worth of fiscal support are expected to boost investment and spending in 2021.

“It’s been a tumultuous year for the commodity market, as the oil meltdown in March changed how we measure and gauge risk in the entire commodity sphere, ” Stephen Innes, chief global market strategist at brokerage Axi, told Reuters.

“But thanks to the Fed’s unwavering support to dig the U.S. and global economy out of a hole, ” commodity markets have flourished, he added.

Dalian iron ore futures and silver are up around 50% in 2020, leading the gains in commodity futures.

Overall, spot Asian LNG led the energy complex, gaining more than 140% this year on booming demand and outages in key suppliers.

Global oil futures have more than doubled from their decade lows hit in April, closing out a historic year that marked the first-ever negative prices for WTI.

“The recovery from the pandemic will accelerate once a vaccine is widely available, further supported by ongoing fiscal and monetary stimulus from governments around the world, ” ANZ said in a note. “A strong global growth pulse will likely see the U.S. dollar weaken, which is normally a prerequisite for a rally in commodity markets.”

Oil prices plunged in March and April when China and other countries went under lockdown to curb the spread of Covid-19, choking off global fuel demand.

Vaccine rollouts have raised hopes for a demand recovery in 2021, brightening the outlook for all energy products, with Goldman Sachs forecasting Brent to hit $65 a barrel in the next 12 months.

Dalian iron ore and Comex silver were the top performing major metals futures in 2020.

Iron ore was driven by a combination of booming demand in China and a drop in supplies from key producer Brazil. In precious metals, Comex silver gained 47.9% and Comex gold 25% on the back of a rush of buying by investors seeking a store of value amid rampant global central bank spending.

In industrial metals, benchmark three-month copper on the London Metal Exchange rose 27% this year, becoming the sector’s best performer.

More gains in copper and other base metals are expected in 2021 as the China-led economic revival expands to other regions. “We will see an overall price surge across metals at least in the first half of the year (of 2021). Money is still trickling through the global economy, ” said commodities broker Anna Stablum of Marex Spectron.

In agriculture, Dalian corn futures were the top performing market in 2020, followed by US soymeal. — Reuters

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