Commodity currencies predicts futures markets lower

Commodity futures markets

What is Commodity futures markets?

Commodity futures markets are a place where commodities like corn, wheat, sugar, and others are traded. They are usually regulated by a government or an exchange for example the Chicago Mercantile Exchange (CME) in the US. Trading takes place on organized exchanges that provide liquidity and greater transparency to the market. A commodity future is kind of like an insurance product you purchase from an exchange that guarantees delivery of a certain amount and quality of any given commodity at a specified date in the future at a set price.

Commodity currencies track a lower futures markets

Commodity futures markets can have a significant impact on currency prices. The currencies of countries with large trading in commodity futures are usually weaker. The main reason is that these currencies are highly influenced by the economic conditions, particularly inflation, which is a result of high demand for commodities. Another factor is that when commodity prices rise, it may result in lower exports to major economic trading partners. This lowers economic growth and puts downward pressure on the currency

What factors affect the price of commodities?

Factors that affect the price of commodities include:

  1. Price and demand of crude oil: Crude oil is one of the major commodity traded around the world, if not the major one.
  2. US dollar and inflation: The dollar is the dominant currency in the world, that’s why, a change in its price or value is closely related to the price of commodities. Inflation increases when demand for commodities is high.
  3. Demand: Demand from the emerging markets has increased, this has become a major source of demand for commodities.
  4. Supply: Supply of commodities are dependent on weather and supply from countries with large reserves such as Canada, Australia and Russia among others.
  5. Speculation: Speculation can also lead to volatile prices for commodity like crude oil which can result in huge profits or losses depending on your position

What are experts saying regarding the current market value of various Commodities?

Crude oil:

Crude oil prices have rebounded from the recent drops this year, but there are many concerns about a possible supply glut as Iran starts exporting again and increased output in Iraq, Libya, and Nigeria. The global supply of crude is expected to increase by 3.4 million barrels per day in 2022. As a result, there may be some downward pressure on prices in the next few years. However, the demand for crude is projected to rise by 1.2 million barrels per day next year and another 1 million barrels per day in 2025.


Gold is expected to remain volatile next year, but prices for the precious metal look likely to rise in 2023. The gold price has risen by more than 7 percent this year, and experts are projecting a further rise of 5 percent or so next year. There is a great need for gold as jewellery demand has been hit by the continuing fall in the value of the pound since last July.


In 2021, US corn production was about 12% lower than normal due to low rainfall and cooler temperatures across the vast majority of corn-growing regions in the United States. Further decline in wheat, soybean and cotton production means increased demand for corn and the price of corn has risen 25% this year. However, with domestic supplies up 13.5 million bushels on year-ago basis, USDA expects end-of-year stocks to be the highest since 2007. The USDA expects to record US yields of 14.6 billion bushels in 2023 with average ending stocks of 51 million bushels.


Cocoa production is expected to decline by as much as 9 percent next year due to poor weather conditions and disease in West Africa. However, the price of cocoa has also risen this year and is expected to rise further in the next year.


Copper prices have been rising since March due to tightening supplies and a strengthening economy that has supported demand for commodities like copper from China’s construction industry and trade in steel.

Rare earths:

Rare earths are a small group of trace elements necessary for modern technology and manufacturing, but they have become more expensive as China controls 95 percent of global production and aims to increase exports despite human rights concerns.

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