The downturn in the global stock market lately is causing some investors to switch their focus elsewhere. Commodities can be a great way to hedge against inflation, as they’re intrinsically valuable and their prices generally increase during times of economic uncertainty – at least some of them.
Prices are largely driven by supply and demand, and for much of 2022 the demand has far outstripped supply for many commodities, although it may be slowing soon. Here we’ll cover some of the top three and bottom three performers for the third quarter 2022.
To take advantage of the top performers, to short-sell the worst commodities, or buy what’s usually popular when things are good right now on the cheap, you should do so through a trusted and regulated broker, such as easymarkets.com, for a reliable and easy trading experience.
Since the western world has been forced to make do without Russian gas, coal prices have benefited hugely from the surging demand. Record high prices were felt in August, up to $460 for Newcastle coal futures, and September has seen similar numbers. Coal consumption isn’t set to slow down in Europe any time soon, with expectations from the IEA that its use will increase by around 7% until the end of the year. China is also driving demand as its hydroelectric energy has struggled with warmer weather.
Lithium is both in demand and temporarily short on supply lately, and prices have hit record highs as a result. From the main supplier, China, the price of a ton of Lithium hit over US$70k in September, as some countries are offering incentives and tax breaks for purchasing electric vehicles to help meet their emissions goals.
Since the conflict began in Ukraine, there has generally been more demand and higher prices for wheat, as shown by the Chicago wheat futures price topping 900 USD per bushel. Ukraine is a major supplier of wheat, and disruptions in the supply chain have affected prices, while increased prices of energy also have an impact.
Silver futures have been down around 25% since back in March, trading around about $19.50 per ounce this month. As the Federal Reserve increases rates, investors will generally sell silver to take advantage of higher-yielding investments. While the global economy is slowing down, the demand for silver in products like jewelry and electronics has also tapered off.
At around $21,000 per ton, Tin futures have been hitting 18-month lows lately, caused by a number of factors, such as the impact of a global slowdown, central banks increasing interest rates, and a lack of investment from mining companies. The pandemic shutdowns in Indonesia and Malaysia were a major disruption.
A strong USD and tightening monetary policy have put a dent in Aluminum futures lately, trading at around $2,250 per ton this month, their lowest since early 2021. The rising cost of energy and a drop-off of demand from China has also impacted prices.