Global commodity prices charged higher on Monday with strong gains in oil, grains, edible oils and metals after Russia put its nuclear deterrent on high alert and Western nations imposed tough new sanctions on Moscow following its invasion of Ukraine.
Brent crude oil jumped by around 4% to back above $100 a barrel, palladium vaulted 4% and Chicago wheat gained close to 5% as buyers tried to price in how to do without supplies from Russia if sanctions disrupt trade.
Aluminium scaled an all-time high of $3,525 a tonne on the London Metal Exchange, while Malaysian palm oil gained nearly 6% as the ripple effects of Russia’s potential severance from global commodity markets took hold.
“The range of near-term price outcomes for commodities has become extreme, given the concern of further military escalation, energy sanctions or potential for a cease-fire.” Goldman said in a note to clients on Sunday.
The rouble plunged nearly 30% to a record low after Western nations imposed new sanctions on Russia, including blocking some banks from the SWIFT global payments system.
Putin raised the stakes on Sunday, ordering Russia’s “deterrence forces” – which wield nuclear weapons – onto high alert, citing statements by NATO leaders and the range of economic sanctions imposed on Russia by the West. Russia calls its actions in Ukraine a “special operation.”
Meanwhile, Brent crude climbed above $100 a barrel as the nuclear alert and bank payment constraints heightened fears that oil shipments from the world’s second-largest producer could be disrupted. Russia accounts for about 10% of global oil supply.
Rubber Futures, Chicago Wheat Rise
Tracking higher oil prices, Japanese rubber futures rose. Natural rubber often takes direction from energy prices as its rival product synthetic rubber is derived from crude oil.
In the agricultural markets, Chicago wheat posted its biggest one-day gain in a decade on worries over supplies from the world’s top exporter of the bread-making ingredient Russia. Corn gained 4%, while soybeans rose 2.6%.
Russia and Ukraine account for around 29% of global wheat exports, 19% of the world’s corn supply, and 80% of world sunflower oil exports.
Malaysian palm oil futures rose for a seventh session in eight, boosted by a rally in crude and soy oil prices and fears of cuts to sunoil bio fuel flows from the Black Sea.
The metals markets also got a lift, with palladium jumping as sanctions on Russia raised supply concerns for the auto-catalyst, for which Russia accounts for roughly 40% of global output.
Fears of supply disruptions also sent LME aluminium prices to an all-time-high and lifted nickel. Russia produces about 6% of the world’s aluminium and accounts for about 7% of global nickel mine supply.
London Metal Exchange aluminium hit a record high of $3,525 a tonne and nickel was up 1% to $24,615 a tonne, after rising by 3% in the session.
• Reuters with additional editing by Jim Pollard
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