Understanding the Role of News Events in Commodity Markets

Commodity markets can move widely. This market movement is not only from the market itself but also from a web of global news. We have put together some global news and changes that may affect the commodity market significantly.

One of the reasons the commodity market may move greatly is Geopolitical Events – The Impact of Wars and Conflicts – as a real like example oil prices during the gulf war in 1990 surged as it was unknown how would the oil supply be effected across the globe.

Also to consider more recent events the war in Ukraine have also effected wheat and natural gas prices for the reason that the production and supply of the commodity may change. Along with Geopolitical events, Political uncertainty in major commodity-producing countries can cause huge market moves.

Although it is not set in stone rule, and may not always be the case however political turmoil in the Middle East also usually leads to higher oil prices.

Besides from conflicts and geopolitical events – interest Rate Changes and Commodity Prices to be specific when central banks raise rates, the cost of borrowing is spiked, often leading to reduced investment in commodities.

Global economic growth increases demand for several commodities. When economies are doing great, the demand for oil, metals, and agricultural products often are spiked higher.

To highlight the above example with a real- life event – In 2021, global economic recovery after COVID led to higher demand, pushing up copper prices by over 60% than what they used to be before the epidemic.

Another effect might also be technological Advancements and Commodity Markets – Technology greatly boosts production efficiency. Such as automated mining and agriculture will reduce cost.

For example when farmers use drones for crop monitoring has made agriculture more precise, affecting supply and prices and would probably reshape market landscape.

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