Common factors affecting commodity prices
Liquidity: For example, Russia's oil export is restricted by European and American countries. Due to the lack of liquidity in the global crude oil market, only Arabia and the Middle East supply crude oil, which makes the supply of crude oil in Europe and the United States in short supply, leading to unlimited price increases.
Inventory and inventory: If the inventory of cotton and grain is too high, it will lead to price drop. Or some countries will release their stocks at a price lower than the market because of their high stocks, which will lead to a sharp drop in prices. For example, in Huang Xiaoyu (soybeans, wheat and corn), food prices plummeted due to the epidemic last year and the year before last.
Geopolitics: If there are serious geopolitical problems in the origin of the commodity, there will be great uncertainties for investors or commodity demanders, and these uncertainties will greatly increase the risk coefficient of commodity prices, thus pushing up the price of bulk commodities.
Natural factors: Natural factors have a great influence on the prices of bulk commodities, especially soft commodities such as crops (cotton, soybeans, wheat and corn), because climatic conditions easily affect the output of crops. Favorable weather conditions can increase crop yield and reduce prices, while bad weather conditions will greatly reduce crop yield and increase prices. For example, if there is no tornado attack on corn in Texas, the yield will explode and the price of corn will plummet.
Supply and demand: commodities are important raw materials that almost all real economies must use, such as copper for household appliances, steel for real estate, oil for chemical industry and so on. When the economic situation is strong, commodity prices will rise.
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