Commodity Prices Reach Highest Level Since 2011 As Global Economy Recovers
May 05, 2021 at 07:50 AM EDT
Commodity prices are now at their highest level in a decade as the global economic recovery stokes demand for metals, food and energy, while poor weather has hurt crop supplies. The Bloomberg Commodity Spot Index, which tracks prices for 23 raw materials, is now at its highest level since 2011. The gauge has climbed more than 70% since reaching a four-year low in March 2020. With major economies emerging from the pandemic, metals are rising as manufacturing picks up, and the return of motorists is boosting energy prices. Meanwhile, crops such as corn, wheat and sugar have surged as dryness has hurt crop production in Brazil, the U.S. and Europe. The U.S. and China are recovering quickly from the global pandemic, stoking demand for more cars, electronics, and infrastructure. Ford Motor Co. (NYSE:F) has said it expects a $2.5-billion U.S. hit from commodity costs such as steel, aluminum and precious metals. President Joe Biden’s $2.25-trillion U.S. infrastructure package and bets that more aggressive climate pledges will accelerate the adoption of solar panels, wind turbines and electric vehicles are also driving gains and raising fears about a metal shortage. Commodities may jump another 13.5% in the coming six months, with oil reaching $80 U.S. a barrel and copper reaching $11,000 U.S. a ton, according to a research note from investment bank Goldman Sachs (NYSE:GS). Crude oil is expected to see the biggest-ever increase in demand over the next six months as the vaccination rollout boosts mobility, according to Goldman Sachs.