Since the beginning of this year, commodities have performed remarkably well. For example, while the S&P 500 has gained 2%, the Dow Jones Commodity index has gained 10%. Why have commodity values increased? Well, it is due to a number of reasons that include more positive news regarding the global economy, international political concerns, and extreme weather conditions.

Which Commodities are Currently Increasing in Price?

Two commodities that have done particularly well are coffee and nickel with increases of over 15% in the past month alone. Coffee is up in price mainly due to the dry weather Brazil is experiencing, and nickel is mainly up in price due to the mineral ore export ban Indonesia imposed in January. However, as the economies in China, Europe, and the US improve, most base metals have benefited from the more positive economic news.

Further, grain, an agricultural commodity, has also increased in price. This situation is mainly due to the concern regarding the impact the Russia-Ukraine conflict will have on grain supplies. Further, the dry weather occurring in both the US and Brazil is pushing the value of this commodity in the upward direction.

Oil Prices Remain High

Following a much cooler winter than normal, the demand for oil in the United States remains high. Additionally, there is a global concern regarding when Libyan-based oil will return back to international markets. Further, the ongoing conflict between Russia and Ukraine is also having an effect on energy markets.

What Will the Future of Commodities Look Like?

In the future, it is expected that oil prices will decrease somewhat as speculation decreases and the supply side increases. However, as positive news regarding the economy is expected to continue, the prices of most base metals will continue to increase in price due to an increase in demand. However, provided there are no major international conflicts, the growing economy will have a negative effect on the price of gold. Moreover, it is important to keep in mind that any type of downturn in China’s economy could have an effect on most base metals as well. Last but not least, the weather will continue to affect the prices of agricultural products and thus, grain may continue to increase in price.