High levels of dispersion in the raw materials complex in May

This article is taken from the Indexology blog of S&P Dow Jones Indices.

In terms of stocks, it was a rather calm month for commodities. The S&P GSCI gained 2.5%, bringing the YTD performance to 26.0%. While the bullish momentum of the S&P GSCI eased, the strong dispersion of individual commodity performance continued, despite reversals among the leaders and laggards. Most grains sagged to the bottom of the performance chart after surging in April, while feeder cattle, silver and gold changed the ends of the chart. Coffee was the exception, with double-digit caffeine-boosting gains in both periods.

More positive demand in the United States and parts of Europe supported the oil complex in May. S&P GSCI Petroleum gained 4.2% over the month. According to OPEC +, the oil glut accumulated during the COVID-19 pandemic is nearly depleted and stocks will decline rapidly in the second half of the year. After various defeats in courts and boards of Western oil companies in the name of reducing carbon emissions in May, OPEC and its allies may be granted additional influence over global oil supplies in the years. to come up.

News that Chinese regulators show zero tolerance for monopoly behavior or hoarding stocks in commodity markets did little to cool industrial metal prices in May. S&P GSCI Industrial Metals gained 3.7%, while S&P GSCI Copper gained 4.4%. Industrial metals continue to benefit from the greener rebuilding of the world’s largest economies following the COVID-19 shock, while miners and investors remain reluctant to increase supply, despite soaring prices. Ultimately, Beijing’s focus on combating speculation may do little more than reduce liquidity on local stock exchanges and reduce stocks of onshore metals, which could have the unintended effect of exert upward pressure on prices in an already tight market.

It has been a good month for precious metals. S&P GSCI Precious Metals rose 7.7% as market participants again focused on inflation risk and the US dollar fell. S&P GSCI Gold hit an almost five-month high at the end of May, benefiting from a rebound in demand for jewelry, bullion and coins in China.

The S&P GSCI Agriculture ended the month down 3.2%. The complex was hit by a turnaround in cereal markets, with corn and wheat ending the month sharply down. Rumors that China had canceled US corn shipments or restricted exports rocked the market, which until recently had seen an impressive, months-long recovery following a sharp squeeze in supplies. world corn. It was a similar story for wheat; S&P GSCI Kansas Wheat was down 12.8% for the month.

S&P GSCI Livestock gained 3.2% in May. Lower feed costs helped prices for lean pigs and feeder cattle, while lean pigs also benefited from strong demand for wholesale pork and a tight supply of ready-to-market pigs. .

The articles on this blog are opinions, not advice. Please read our disclaimer.


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