Jakarta, CNBC Indonesia – Commodity markets extended their rally on Thursday (3/3/2022), with aluminum, coal and CPO (crude palm oil) all hit new records, while crude oil and wheat hit multi-year highs as Russia’s incursion into Ukraine disrupted global flows of raw materials.
Russia’s position as a major supplier in the oil, gas, metals, grain and shipping markets led to harsh sanctions imposed on several Russian entities after Moscow’s attack on Ukraine has changed some critical resource supply chains.
Aluminum prices on the London Metal Exchange have gained 30%, while US wheat futures have jumped 25% this week alone as markets try to assess the impact of a potential loss of Russian supply if the international community launches additional punitive action against Moscow.
The United States is preparing a package of sanctions targeting more Russian oligarchs and their companies and assets, US President Joe Biden said at the annual State of the Union meeting with members of Congress yesterday.
Brent crude rose above $118 a barrel for the first time since February 2013 as consumers grappled with financing and shipping issues that have crippled purchases from the world’s third-largest oil producer this week.
Brent crude futures traded up 3.4% at US$ 116.79 per barrel.
“Russia’s attack on Ukraine created further turmoil for global energy markets already reeling from extreme price volatility over the past two years,” said Sam Reynolds, energy finance analyst at the Institute for Energy Economics and Financial Analysis, (IEEFA). from Reuters.
ANZ Australia raised its short-term target for oil to $125 per barrel, adding that a supply shortfall could push further gains.
In industrial metals and minerals, LME aluminum prices rose 2.3% to an all-time high of US$ 3,650 per tonne, while nickel rose more than 4% to US$ 26,935 per tonne as traders tried to factor in the potential loss of supply from Russia which is the third largest producer of both metals.
As for grain, according to the US Department of Agriculture, Russia and Ukraine are projected to account for 28.5% of global wheat exports by 2021, so global wheat prices are spiking higher to try to accommodate the large drop in supply from the two countries.
Chicago wheat prices have risen nearly 40% in the past month, and have risen to a 14 -year high of US $ 11.34 per bushel.
Russia and Ukraine also account for 19% of maize exports and 80% of sunflower oil exports, which compete with soybean oil and palm oil.
Malaysian palm oil prices hit a record high of ringgit 6,950 per tonne on Thursday, while US soybeans hit their highest level since 2008.
Newcastle coal futures have also been on the fly since sanctions were imposed on Russia, which is the third largest coal exporter. Newcastle’s benchmark April contract price has jumped to a record US$446 per tonne today, up 100% from last month.
CNBC INDONESIA RESEARCH TEAM
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