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Commodities gauge hits new high amid supply crunch

By on June 6, 2022 0

Spot commodity prices hit a new high as energy and food supplies continue to be disrupted by war in Ukraine, while China rolls back Covid-19 lockdowns that are dampening demand.

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(Bloomberg) – Spot commodity prices hit a new high as energy and food supplies continue to be disrupted by war in Ukraine, while China rolls back Covid-19 lockdowns that are dampening demand.

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The Bloomberg Commodity Spot Index, which tracks the prices of 23 commodities, rose 1.9% on Monday to its highest level on record. The move was driven primarily by an increase in natural gas and wheat futures amid renewed supply fears. The gauge has climbed 36% this year, heading for the biggest annual gain in more than a decade.

Commodities have soared since the trough of the early days of the pandemic, driven by massive stimulus spending, production cuts and widespread bottlenecks in supply chains. The move, which fueled the highest inflation in four decades and prompted central banks to raise interest rates, was exacerbated by Russia’s invasion of Ukraine, which further disrupted supply. in energy and cereals. Signs that China is easing strict coronavirus measures have also helped push prices higher.

The rally in commodities this year has been led by higher prices for oil, gas and transportation fuels amid supply shortages. Bloomberg’s spot energy sub-index has soared more than 92% since the start of the year, the most since at least 1992, when global stocks are under pressure. An agricultural price indicator gained 24%.

(Updates with key drivers from Monday’s rally in second paragraph.)