Commodities Burst Higher In April

variety of assorted-color beans

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Several commodities made new all-time highs, as the global economy reflated, consumer confidence hit pre-pandemic highs, and housing prices in the U.S. jumped the most in 15 years. The S&P GSCI continued to perform well, rising 8.2% for the month to start the second quarter, following a strong 13.5% in the first quarter. Most commodities sectors rose by several percentage points, while the S&P GSCI Livestock fell 2.3%. The S&P GSCI Iron Ore rose 18.7% this month, more than tripling its performance from a year ago. The S&P GSCI Biofuel rose 19.8%, as the underlying corn, wheat, soybean oil, and sugar displayed impressive double-digit percentage gains. The U.S. Personal Consumption Expenditures (PCE) Price Index rose 2.3%, confirming inflationary pressures are here, albeit from the low April 2020 base.

In its latest meeting, OPEC+ agreed to stick to the plan of easing oil output cuts from May to July due to the upbeat demand picture. The different crude oil grades and heating oil performed well, but the S&P GSCI Natural Gas came to life this month, up 9.41%, due to demand. According to the International Energy Agency (IEA), the greenhouse gas emissions from natural gas are 45%-55% lower than those of coal to generate electricity. Natural gas is considered one of the lower-cost, lower-carbon-emitting vessels to help ferry the world to a net-zero future.

Copper climbed to its highest point in almost a decade in April, as the global economy continued to recover from the COVID-19 pandemic, pushing the broad S&P GSCI Industrial Metals 9.7% higher over the month. Industrial metals have benefitted from the world’s largest economies announcing programs to build back greener from the COVID-19 shock; at the same time, companies and investors remain reluctant to expand supply, despite the surge in prices. A recovery of global steel demand over the past 12 months has driven the market for its main ingredient, iron ore, climbing, and helped the S&P GSCI Iron Ore reach another all-time high in the last week of the April. The resilience of iron ore prices has also been compounded by tight supply over the past three months, as Brazil and Australia experienced seasonal production reductions.

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Duanne Johnson 1 week ago Member's comment

Yup it's not done. If 7.5 breaks I think we see 10 long term.

Been calling for that level since last January. It's coming! So many factors at play.