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Aluminium hits record top; oil, wheat at multi-year highs on supply woes -Breaking

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© Reuters. FILEPHOTO: These aluminium blocks were seen in Wagner Automotiv Industry in Gradacac (Bosnia and Herzegovina), February 8th, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

Gavin Maguire and Naveen Thukral

SINGAPORE (Reuters – Thursday saw commodity markets extend their bull runs with aluminum, coal, and palm oil hitting new heights. Wheat, however, reached multi-year records as a result of Russia’s invasion in Ukraine.

Russia is a major supplier of oil, gas and metals to the shipping market. The harsh sanctions imposed on several Russian entities after Moscow invaded Ukraine have disrupted many critical resource supply chains.

The London Metal Exchange has seen aluminium prices rise by 30 percent, and the U.S. Wheat futures rose 25% in this week’s trading. Markets are trying to estimate the potential impact of Russian supply disruptions if additional sanctions against Moscow are taken.

Two sources close to the situation said Wednesday that the United States was preparing sanctions packages targeting Russian oligarchs and their assets. This comes as Washington increases pressure on Vladimir Putin.

As buyers battled to finance and ship their purchases, oil prices rose more than $118 per barrel this week for the first-time since February 2013. [O/R]

Brent crude oil futures traded up 3.4% to $116.79 per barrel as of 0631 GMT.

“Russia’s invasion of Ukraine spells more chaos for global energy market already reeling under extreme price volatility over two years,” explained Sam Reynolds (IEEFA), an energy finance analyst from the Institute for Energy economics and Financial Analysis.

Australia’s ANZ has increased its short-term oil price target to $125 a bar, adding that there could be further upside in the event of a shortage.

LME aluminum rose 2.3%, reaching a record high of $3650 per ton. Meanwhile, nickel gained over 4% to $26,935/tonne. This is because traders were trying to adjust for the fact that the third-largest manufacturer of the metals had stopped producing it. [MET/L]

Russia and Ukraine, which are projected to be responsible for 28.5% of the world’s wheat exports, were in fact forecasted to make up 28.5% of all global grain exports in 2021 according to U.S. Department of Agriculture. As a result, global wheat prices have gone higher in an effort to offset a significant drop in both countries’ supplies.

Chicago wheat futures have increased nearly 40% over the last month and are at 14-year highs, $11.34 per bushel. [GRA/]

Russia and Ukraine account for 19% and 80% respectively of the corn and sunflower oil exports, both of which are in direct competition with soybean oil and palm oil.

Malaysian palm oil prices reached record heights at 6,950 Ringgit per Ton on Thursday. U.S. soybean oil was the highest level since 2008.

Newcastle coal futures also have been on a wild run since the imposition of sanctions on Iran, which saw them rise to $440 per tonne. This is a 100% increase from last month.

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