Top volatile commodities

The Russian-Ukrainian war and China's recent Covid lockdown, have had their toll on the supply chain causing market volatility. Energy, metal, and agricultural commodities are impacted by the supply chain disruption. Agricultural commodities such as cotton, wheat, sugar, coffee, corn, soybean, and cocoa are leading commodities. Whereas silver, copper, gold, and iron ore are on the top of the list of volatile metal commodities. As the supply for the commodities remains below demand, it’s important to have a look at the price fluctuation of some of these commodities.

China, India, Russia, and the US are the top wheat-producing countries. Wheat futures prices have been impacted by the supply chain disruption due to the Ukrainian-Russian conflict, China’s lockdown, and India’s wheat export ban. As a result, wheat futures prices have been quite volatile. Early March prices rallied in an upward trend reaching 12.94$. It dropped to a new resistance 11.18$ and remained there from mid-March until the beginning of May. The prices reached a high of 12.28$. However, prices fell back to 11.37$ and remained there. This could be due to the Ukrainian-Russian agreement on the supply corridor that provides safe lanes for foreign ships to leave the Black Sea and Sea of Azov ports, permitting commercial shipping of Ukrainian grains.

Sugar futures prices fluctuated due to China's lockdowns and India’s export restrictions. India, the second-largest supplier, stated that it will limit sugar exports to only 10 million tonnes, to ensure food security. Last August, the sugar futures prices reached 20.4 cents per pound but fluctuated and went down in the subsequent months reaching 18.62 cents per pound at the beginning of May. Futures prices have reached a four-week high of 20 cents per pound in mid-May. Looking at the 3 months price chart of sugar futures, the prices have fluctuated rapidly in uptrends or downtrends, signaling volatility and uncertainty.

The soybean futures prices' uptrend began its steady climb in January from 1355 to 1746.75 in April. From February to May, the soybean fluctuated in a range reaching 1585.25 as the support level and 1746.75 as the resistance level. The top soybean-producing countries are the United States, Brazil, Argentina, China, India, and Ukraine among other countries. The impact of china’s lockdowns and the Ukrainian-Russian conflict have also impacted the prices of soybean futures making them more expensive and volatile.

Metals such as silver and gold are bought as a hedge against inflation. As a result, silver futures rallied for the past 6 months signaling high volatility. Silver futures traded at 26.8$ per ounce in March, reaching the resistance and fluctuating in a range between March and April. Despite the weak dollar and high yields, silver futures prices decreased drastically and traded at 22$ per ounce in May, due to interest rate hikes and fears of further Fed tightening.

Copper futures fell from 4.7$ per pound in mid-April to $4.3 per pound in May. The prices fluctuated and rose steadily between February and April. In May, prices started to decline in a downtrend weighed down by fears over China's demand. The top producing copper countries are Chile, China, Peru, and the US. China imports copper from Chile, Peru, Mexico, Mongolia, and Australia. However, due to several lockdowns, the imports declined by 4% in April pushing prices up. As China announced that the long-term Shanghai lockdown will end on June 1st, prices went down signaling more demand from China for copper.

Amid recession fears and uncertainty of interest rate hikes, metal commodities futures are expected to decrease in price due to slowing global demand, whereas agricultural commodities prices are volatile due to supply chain disruptions, geopolitics, and concerns about supply shortage and food security across the globe.

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