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Weather woes, supply struggles, Chinese stimulus spur commodity rally

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GUANGZHOU, CHINA - AUGUST 15: Citizens are seen on the street during the hot weather on August 15, 2022 in Guangzhou, Guangdong Province of China. Several regions in China are sweltering under temperatures above 40 C, meteorological authorities have continued to issue high temperature alerts for 25 consecutive days. (Stringer - Anadolu Agency)
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Aug 30, 2022 - 07:10 AM

ISTANBUL (AA) – Commodity markets saw an upward trend last week as soaring global temperatures, supply concerns, and China’s economic incentives fanned fears.

China stepped up its 1 trillion yuan ($146 billion) economic stimulus to support growth and mitigate the effects of repeated COVID-19 shutdowns and the real estate market crisis. This was received positively in the commodities market.

While losses were observed in precious metals, increases were dominant in base metals. Last week gold fell 0.5%, silver 0.7%, and palladium 0.7%.

Uncertainties regarding the monetary policy of the US Federal Reserve in September caused fluctuations in the price per ounce of gold.

In the over-the-counter market, copper rose 2.1%, aluminum 3.9%, and zinc 1.7%.

Brent crude rose more than 3% on supply concerns.

The rise in prices was due to Saudi Arabia’s statement that OPEC could cut production despite the recent declines in oil prices.

The news that oil producers such as ExxonMobil and Chevron might not be able to export Kazakh oil transported to Europe via Russia due to damaged equipment also supported supply concerns and helped fuel the upward movement in prices.

Due to ongoing hot weather in Europe, concerns about supply caused an increase in wheat and corn prices.

On the Chicago Mercantile Exchange last week, wheat gained 5.2%, corn 6.7%, soybeans 4.3%, and rice 1.3%.

Coffee prices finished the week up 12.2%, while cocoa gained 1.9%, cotton 1.6%, and sugar 2.1%.

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