As manufacturers continue to feel the pinch of rising commodities costs, the last week has shown little let up in continuing volatility, with cotton, sugar and precious metals rising steeply.
The Intercontinental Exchange (ICE) saw one of the biggest hikes in cotton as it rose by 13% on the week, which represented a massive 33% increase on the month. The steep price hikes are likely to have been caused by a depletion in cotton crops due to bad weather and flooding in Pakistan, China and India and rising demand.
Sugar which has also been rising steeply recently was up by 9% on week and by over 20% on the month, while soya beans rose by nearly 4% on the week and over 12% on the month.
The Chicago Mercantile Exchange (CME) also saw steep rises in precious metals with gold up by nearly 3% on the week and nearly 4% on the month; silver up by nearly 9% on the week and 15% on the month which represents its highest price since 1980; while palladium is up by over 6% on the week and a massive 16.5% on the month – marking its highest price jump in years.
Meanwhile, the London Metal Exchange (LME) also saw steep increases on other metals, including aluminium which is up by nearly 6% on the week and over 5% on the month; copper which is up by 5.73% on week, over 7% on month; and nickel which is up by over 7.8% on the week. .
However, there are a plethora of less well reported-on commodities which are significantly moving and causing considerable concern in the markets.
I read an interesting piece on these commodities over the weekend in the Independent on Sunday which reported on major movers including potash, palm oil, diamonds and iridium – all of which are used in the production of a significant amount of the world’s products.
Palm oil – which is used in a third of all foods – has currently reached a 27 month peak as increased demand took its price to over $1000 a ton last week – after a 50% increase during 2009, which could be due to the increased requirement for sustainable sourcing of palm oil.
After months of wheat volatility, the dramatic rising demand for potash – which is used in fertilisers – is another interesting one to watch, as it shot above $300 a ton recently and it is now forecast to rise to $500. This will have a natural impact on farming.
