Commodities are popular among traders as the range of instruments adds diversification to their portfolio. But what are the top 5 commodities to trade so far this year? Let’s find out, before giving you a run down of the most important tradeable events this week.
Hot Commodities In 2021
Here’s what everyone has been trading this year and why.
The phased end of Covid lockdowns massively pumped up demand for fuels in the industrial and transportation sectors. Over the coming months, the increased ability for people to travel is expected to lift demand further.
A Reuters survey found that OPEC oil output rose in July to its highest since April 2020. With fears that this level is beginning to become crippling, the group has eased production curbs and top exporter Saudi Arabia has phased out its voluntary supply cut.
Aluminium is another great commodity to trade. This lightweight metal is used in a variety of different industries such as manufacturing and construction. Aluminium is primarily used to make automobiles and electronics and is, therefore, always in high demand.
The recent flooding in China’s Henan province has impacted prices dramatically. The region accounts for around 5% of China’s total Aluminium production.
Many traders will be looking to buy into the metal before prices rise even further.
Source: London Metal Exchange
This one is a mainstay on most commodity traders lists. Gold is one of the oldest and most valuable commodities in the world and has long been an important commodity to trade.
The yellow metal is used heavily in the jewellery, medical, electronics and manufacturing industries.
The biggest gold producing countries are China, Australia, Canada and the biggest consumer is India. Gold is currently at a bit of a low point against the USD, as reports of covid infections are gathering pace.
The US economy appears to be weathering the storm and hawkish statements from the Fed are a key factor in dampening the price of gold.
#4 Arabica coffee
Prices for Arabica coffee have been trending higher since March. The contract reached a high of $2.078 a pound on 26th July. The price has since retreated to $1.7955 as the contract was overbought, but the market is expected to find continued support in this area.
Prices have been pushed up due to concerns about the situation in Brazil. The country is the world’s largest producer, but is facing its worst drought in 91 years. With the country now in the dry season, it faces a period of water shortages that will affect agriculture.
Brazil accounts for around a third of global production, so the tightening of supply has an impact on the global market.
In addition, protests in Columbia, the second-largest producer that accounts for 10% of the total international supply, have delayed shipments since the end of April.
In short, supply is down and demand is never going to drop — that only means one thing for traders!
That Brazilian drought is affecting more than just coffee supplies. Grain prices have also been massively impacted by the situation there, as well as similarly dry weather in the Great Plains and Midwest regions in the US.
High corn prices are prompting farmers, particularly in China, to buy wheat for feed, also lifting the price of wheat.
Source: Trading Economics
What’s On The Trading Agenda This Week?
Here’s everything you need to keep track of this week.
● USD — Markit Manufacturing PMI Final (JUL); ISM Manufacturing PMI (JUL)
● AUD — RBA Interest Rate Decision
● NZD — Employment Change QoQ (Q2); Unemployment Rate (Q2)
● GBP — BoE Interest Rate Decision
● CAD — Balance of Trade (JUN)
● AUD — RBA Statement on Monetary Policy
● CAD — Employment Change (JUL); Unemployment Rate (JUL)
● USD — Non Farm Payrolls (JUL); Unemployment Rate (JUL)
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The Contentworks team