Thursday, February 25

For commodities, the year starts with a bang after a 19% decline in 2020

Despite the upheaval in the global economy, caused by the Covid-19 pandemic, a raw material continues to play its note solo. Already featured in 2019, palladium is once again at the top of the bill in 2020, with a stratospheric increase in its price (+ 43%). It is ahead of wood (+ 39%), coconut oil (+ 38%), palm oil (+ 28%), but also gold and silver, which have returned to favor throughout of the year and end with a jump of 27%. The yellow metal has even passed the mythical bar of 2,000 dollars (1,650 euros) an ounce.

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Conversely, oil, coal and gas are at the bottom of the table, down nearly 30%. Driven by this sudden ebb, commodities ended the year 2020 down 19%, according to data published on Wednesday, January 20, by the CyclOpe institute. For 2021, the latter anticipates a rebound of the same magnitude.

China regains its appetite

“We ended the year 2020 with a bang, and the prices, at the start of the year, are extremely high”, believes Philippe Chalmin, professor at Paris-Dauphine University and founder of CyclOpe. And to cite, as an example, the price of wheat, which is currently negotiated at over 230 euros per tonne, as well as corn, at nearly 220 euros per tonne. “The Chinese factor even affects the grain market”, notes Mr. Chalmin.

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China has, in fact, shown a renewed appetite, importing 100 million tons of soybeans and nearly 50 million tons of cereals in 2020. Enough to ignite prices. Especially since the shadow of La Niña, a climatic phenomenon that disrupts temperatures and precipitation in the Pacific, floats over the next agricultural season. Not to mention the Russian government’s decision to tax its wheat exports, from February, in an attempt to curb inflation.

High volatility

China increasingly conditions the development of the commodity market. This was demonstrated again in 2020. The putting on hold of its economy, the first affected by the coronavirus, has plunged the prices of ores, industrial metals, cotton or rubber. Conversely, the restart, from the summer, caused the price of these raw materials to soar. “Beyond the classic reference to copper, it is iron ore that has had the most impressive course: its price at the extremes doubled between April and the end of the year, when it reached 165 dollars a ton “, explains Mr. Chalmin. According to CyclOpe, Chinese steel production exceeded 1 billion tonnes for the first time in 2020.

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