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After China announced that it will auction portions of its strategic stockpiles of industrial metals to domestic companies, global commodities prices fell back across a range of raw materials.
Futures prices for palladium and platinum dropped 11 and 7 percent, respectively, on 17 June; contracts tied to copper retreated 4.8 percent.
Crude oil prices edged down 1 percent; even corn futures reined back 6 percent.
“Base metals prices are melting as China’s State Council escalates its crackdown against commodity speculators and hoarders,” TD Securities’ commodities strategist Daniel Ghali, wrote last week in a research note quoted by CNBC.
The U.S. Federal Reserve’s mildly firmer hints about raising interest rates also might have helped lower prices by strengthening the outlook for the dollar. (See related story.)
The U.S. Dollar Index, which measures the buck’s strength against the currencies of six American trading partners, rose more than 1.5 percent after the Fed announced on 16 June its revised timetable for possible rate hikes.
Commodities often are priced in dollars; a stronger dollar would tend to push prices down.
TRENDPOST: As we noted in our 25 May, 2021, issue (“Metal Prices Fall After China Warns Sellers”), while governments will do what they can to drive down inflation, it is purely a supply and demand issue. With much of the world winding down the COVID War, consumer spending will increase, which will drive up prices.
Thus, we maintain our forecast that while prices of many commodities will decline from record highs, their price points will remain far above where they were before the COVID War was launched. Therefore, inflation will continue to rise.