Commodity prices were already on a steady rise in 2021 and early 2022 thanks to the loose monetary policies several leading countries adopted during the Covid-19 pandemic.
However, the UkraineRussia conflict that broke out on February 24 has spread panic waves through the world of commodities and resulted in an all-out commodity price shock globally.
During 2021, the crude oil prices had steadily climbed from $60 levels to $85 due to fast growing demand and inability of supplies to keep pace.
However, the ongoing conflict has resulted in Brent crude oil prices jumping to $130 per barrel in first half of March 2022 their highest level since 2008.
Natural gas, unlike crude oil, is a regional market due to supply constraints. The price of natural gas in Europe hit an all-time high on March 7, briefly touching 345 euros per megawatt-hour. That’s equivalent, in terms of British thermal units of energy, to oil prices of $600 per barrel.
The Steel Futures traded on NCDEX stood largely below Rs 25,000 per tonne between until 2020. They jumped to an average of around Rs 45,000 during 2021. But the conflict resulted in steel futures jumping to Rs 62,500 level in March 2022.
Among the non-ferrous metals, nickel is an important non-ferrous metal used in making stainless steel, coins, dry batteries and many other industrial uses. Nickel prices rose gradually from $15,000 per tonne to $20,000 during 2021.
The war, however, has resulted in Nickel prices jumping to a high of $100,000 per tonne on the London Metal Exchange in March 2022.
Aluminium prices, which ranged at around $2600 per tonne in 2021 on LME, jumped to a high of $3850 in the first week of March 2022 on Ukraine-Russia conflict.
The price of Zinc futures on LME, which stood at $3,600 per tonne on February 24, 2022, just before the start of Russia’s invasion, spurted to a high of $4,150 on March 8, 2022.
Among the precious metals, Gold future prices, which were trading at $1940 per troy ounce on February 24, jumped to a high of $2040 on March 7.
Silver futures jumped from $24 on 24th February 2022 to $26.8 on 8th March 2022 on International Commodity Exchange.
The conflict has also caused a large jump in various agri-commodities. Wheat prices, for example, spurted from $860 per bushel on February 24 to $1420 on March 8. The current price at $1071 is still 40 per cent higher than the average wheat price during the full 2021 year.
The US Corn Futures jumped from $680 per bushel on February 24, to $750 on March 14.