Orange juice to rhodium: A surge all round

Commodities – ranging from agricultural products to precious metals – are burgeoning as supply constraints worry investors and buyers.

- David McKay

Few commodities have performed better than orange juice so far this year.

Traded in New York in a frozen concentrated form, it was much sought out during the early months of the Covid-19 pandemic when consciousness regarding health was especially high. Prices ended up more than a fifth higher by the end of June.

It can’t all be health, however. Arabica, a high-grade coffee bean, also experienced significantly improved pricing after initially retreating when investors first worried about its consumption in cafés amid lockdowns. Prices then surged as concern shifted towards securing coffee in the face of rising logistical risks, another factor brought to bear by the Covid-19 pandemic.

Luckily, these are not the only commodities that have enjoyed price support since the pandemic. In fact, analysts think the earnings of mining companies producing rival commodities such as platinum group metals (PGMs) and iron ore might not end up as liquidised as first feared when the Covid-19 virus initially swept across the globe.

Macquarie, the Australian bank, said in a recent report that the last six months have seen one of the world’s fastest-ever “busts” replaced “... by one of the quickest recoveries”. Global GDP growth is likely to increase by about 7% in the second half of the calendar year, after falling 8% in the first half, although the recovery may slow in the fourth quarter as occasional lockdowns are implemented by governments.