The 2020s commodities boom refers to the rise of many commodity prices in the early 2020s following the

COVID-19 pandemic The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identi ...

. The

COVID-19 recession The COVID-19 recession, also referred to as the Great Lockdown, is a global economic recession caused by the COVID-19 pandemic. The recession began in most countries in February 2020. After a year of global economic slowdown that saw stagnati ...

initially made commodity prices drop, but lockdowns, supply chain bottlenecks, and dovish

monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often a ...

limited

supply Supply may refer to: *The amount of a resource that is available **Supply (economics), the amount of a product which is available to customers **Materiel, the goods and equipment for a military unit to fulfill its mission *Supply, as in confidenc ...

and created excess

demand In economics, demand is the quantity of a good that consumers are willing and able to purchase at various prices during a given time. The relationship between price and quantity demand is also called the demand curve. Demand for a specific item ...

causing a commodity super cycle rise. The

2022 Russian invasion of Ukraine On 24 February 2022, in a major escalation of the Russo-Ukrainian War, which began in 2014. The invasion has resulted in tens of thousands of deaths on both sides. It has caused Europe's largest refugee crisis since World War II. ...

worsened the bottlenecks, creating the 2022 Russia–European Union gas dispute and the 2021–2022 United Kingdom natural gas supplier crisis, contributing to the 2021–present global energy crisis. As Russia and Belarus are major fertilizer exporters and natural gas is a primary component in many

fertilizer A fertilizer (American English) or fertiliser (British English; see spelling differences) is any material of natural or synthetic origin that is applied to soil or to plant tissues to supply plant nutrients. Fertilizers may be distinct from ...

s, fertilizer prices rose accordingly, starting the

2022 food crises 2022 saw a rapid increase in food prices and shortages of food supplies around the world. The compounding crises in distinct parts of the world were caused by compounding geopolitical and economic crisis. The crises followed food security ...

. The previous commodity super cycle was the

2000s commodities boom The 2000s commodities boom or the commodities super cycle was the rise of many physical commodity prices (such as those of food, oil, metals, chemicals and fuels) during the early 21st century (2000–2014), following the Great Commodities Depress ...

, which was attributed to

emerging market An emerging market (or an emerging country or an emerging economy) is a market that has some characteristics of a developed market, but does not fully meet its standards. This includes markets that may become developed markets in the future or wer ...

s, especially that of China, providing a high demand for raw materials.

Food

Global food shortages already existed due to the COVID-19 pandemic when, during the

, Russia

blockade A blockade is the act of actively preventing a country or region from receiving or sending out food, supplies, weapons, or communications, and sometimes people, by military force. A blockade differs from an embargo or sanction, which are leg ...

d the

Port of Odesa The Port of Odesa or Odesa Sea Port ( uk, Одеський морський порт, translit=Odeskyi morskyi port), located near Odesa, is the largest Ukrainian seaport and one of the largest ports in the Black Sea basin, with a total annual tra ...

, preventing grain exports. Ukraine is known as the

breadbasket The breadbasket of a country or of a region is an area which, because of the richness of the soil and/or advantageous climate, produces large quantities of wheat or other grain. Rice bowl is a similar term used to refer to Southeast Asia; and C ...

of Eastern Europe because of its fertile soil and exports of

wheat Wheat is a grass widely cultivated for its seed, a cereal grain that is a worldwide staple food. The many species of wheat together make up the genus ''Triticum'' ; the most widely grown is common wheat (''T. aestivum''). The archaeologi ...

, corn, and sunflower oil.

Turkey Turkey ( tr, Türkiye ), officially the Republic of Türkiye ( tr, Türkiye Cumhuriyeti, links=no ), is a transcontinental country located mainly on the Anatolian Peninsula in Western Asia, with a small portion on the Balkan Peninsula in ...

and the

United Nations The United Nations (UN) is an intergovernmental organization whose stated purposes are to maintain international peace and security, develop friendly relations among nations, achieve international cooperation, and be a centre for harmoniz ...

brokered the Black Sea Grain Initiative between Russia and Ukraine, allowing the controlled export of grain through the Port to the

Black Sea The Black Sea is a marginal mediterranean sea of the Atlantic Ocean lying between Europe and Asia, east of the Balkans, south of the East European Plain, west of the Caucasus, and north of Anatolia. It is bounded by Bulgaria, Georgia, Rom ...

, though shipments have yet to reach prewar levels. Natural gas is in most fertilizers, and fertilizer prices rose due to the Russia–European Union gas dispute, contributing to the food crises.

Oats

Hectare The hectare (; SI symbol: ha) is a non-SI metric unit of area equal to a square with 100- metre sides (1 hm2), or 10,000 m2, and is primarily used in the measurement of land. There are 100 hectares in one square kilometre. An acre is ...

s of oats are down in North America along with droughts in the United States is limiting supply. Demand is up around the world for oats and 38.5% in one year for

East Asia East Asia is the eastern region of Asia, which is defined in both Geography, geographical and culture, ethno-cultural terms. The modern State (polity), states of East Asia include China, Japan, Mongolia, North Korea, South Korea, and Taiwan. ...

Orange juice

Orange juice Orange juice is a liquid extract of the orange tree fruit, produced by squeezing or reaming oranges. It comes in several different varieties, including blood orange, navel oranges, valencia orange, clementine, and tangerine. As well as vari ...

prices have been close to an all time high in 2022 because of Hurricanes Ian and Nicole. Citrus greening disease has been causing damage to citrus trees in the United States since 1998 when it was discovered, dropping the

orange Orange most often refers to: *Orange (fruit), the fruit of the tree species '' Citrus'' × ''sinensis'' ** Orange blossom, its fragrant flower *Orange (colour), from the color of an orange, occurs between red and yellow in the visible spectrum * ...

production by half. Orange juice prices

Lumber

Lumber prices increased with the hot housing market. Potential new American

tariff A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and pol ...

s of 17.99% on Canadian lumber also sent the price higher. Those tariffs were finalized lower to 11.64% by the

Biden Administration Joe Biden's tenure as the 46th president of the United States began with his inauguration on January 20, 2021. Biden, a Democrat from Delaware who previously served as vice president under Barack Obama, took office following his victory ...

. New contracts that allow

semi trucks A semi-trailer truck, also known as a semitruck, (or semi, eighteen-wheeler, big rig, tractor-trailer or, by synecdoche, a semitrailer) is the combination of a tractor unit and one or more semi-trailers to carry freight. A semi-trailer ...

to haul contracts instead of just rail cars starting August 8, 2022, potentially contributing to normalization of prices in the second half of 2022. Mortgage interest rates rising with inflation is another reason for cooling housing demand and consequently lumber as well.

Natural gas

Natural gas prices have increased around the world. In Europe, Russia has invaded Ukraine and Europe is very dependent on Russia for

natural gas Natural gas (also called fossil gas or simply gas) is a naturally occurring mixture of gaseous hydrocarbons consisting primarily of methane in addition to various smaller amounts of other higher alkanes. Low levels of trace gases like carbo ...

via pipelines. Russia has economically weaponized natural gas and reduced flows on pipelines like the

Nord Stream 1 Nord Stream (German-English mixed expression; german: Nord and en, Stream, literally 'North Stream'; russian: Северный поток, ''Severny potok'') is a pair of offshore natural gas pipelines in Europe that run under the Baltic Sea ...

. Natural gas prices had been increasing worldwide before the invasion of Ukraine and increased substantially thereafter; in some areas, the price of gas has increased more than tenfold. Natural gas recently became more of a global market with

liquefied natural gas Liquefied natural gas (LNG) is natural gas (predominantly methane, CH4, with some mixture of ethane, C2H6) that has been cooled down to liquid form for ease and safety of non-pressurized storage or transport. It takes up about 1/600th the vol ...

and LNG ships maturing in size with

Qatar Qatar (, ; ar, قطر, Qaṭar ; local vernacular pronunciation: ), officially the State of Qatar,) is a country in Western Asia. It occupies the Qatar Peninsula on the northeastern coast of the Arabian Peninsula in the Middle East; it ...

being a world leader in exporting

LNG Liquefied natural gas (LNG) is natural gas (predominantly methane, CH4, with some mixture of ethane, C2H6) that has been cooled down to liquid form for ease and safety of non-pressurized storage or transport. It takes up about 1/600th the volu ...

. This

globalization Globalization, or globalisation (English in the Commonwealth of Nations, Commonwealth English; American and British English spelling differences#-ise, -ize (-isation, -ization), see spelling differences), is the process of foreign relation ...

of this fungible commodity has caused the prices to shadow each other more in different markets. Previously, natural gas was more difficult to ship, and required pipeline infrastructure, which generally can only be emplaced on land, or for relatively short distances undersea. With the increased use of LNG, gas can be shipped by sea, albeit with the requirement of specialized port facilities.

Crude oil and petroleum products

Crude oil prices dropped dramatically during the first months of the COVID Pandemic ( WTI went negative for a day) and production was cut in anticipation of a prolonged slowdown. Demand soon exceeded supply because of loose monetary policy causing a global energy crisis and prices to rise. Russia's invasion of Ukraine also resulted in price increases due to sanctions and trade restrictions.

Jet Fuel

Kerosene jet fuel refining has to compete with

Diesel fuel Diesel fuel , also called diesel oil, is any liquid fuel specifically designed for use in a diesel engine, a type of internal combustion engine in which fuel ignition takes place without a spark as a result of compression of the inlet air and ...

and

gasoline Gasoline (; ) or petrol (; ) (see ) is a transparent, petroleum-derived flammable liquid that is used primarily as a fuel in most spark-ignited internal combustion engines (also known as petrol engines). It consists mostly of organi ...

at the refineries when refining petroleum products. Jet fuel topped $5 a gallon in 2022.

Kerosene heating oil #1

Kerosene Kerosene, paraffin, or lamp oil is a combustible hydrocarbon liquid which is derived from petroleum. It is widely used as a fuel in aviation as well as households. Its name derives from el, κηρός (''keros'') meaning "wax", and was regi ...

heating oil was approaching $4 dollars per gallon in March 2022. The

EIA Eia or EIA may refer to: Medicine * Enzyme immunoassay * Equine infectious anemia * Exercise-induced anaphylaxis * Exercise-induced asthma * External iliac artery Transport * Edmonton International Airport, in Alberta, Canada * Erbil Internation ...

stopped reporting the data in March 2022. Kerosene wholesale price

Diesel heating oil #2

Diesel heating oil went from around $2 before the pandemic to almost $5 a gallon in 2022. The prices have peaked and are falling in 2022.

Electricity

Electricity prices rose in the United States through 2021 and 2022 mostly from the increase in natural gas prices which makes up the 35% of electricity generated in the United States US Electricity Prices

Lithium

The price of lithium carbonate started to rise in 2021 after slumping in 2020 and peaked in early 2022 close to $80,000 per

ton Ton is the name of any one of several units of measure. It has a long history and has acquired several meanings and uses. Mainly it describes units of weight. Confusion can arise because ''ton'' can mean * the long ton, which is 2,240 pounds ...

. Demand for electric vehicles around the world is the primary cause for the price rise. In 2021, electric vehicle sales doubled to 6.6 million from 2020.

Copper

The price of copper rose through 2021 and peaked close to $5 per pound in Q2 2022 before retreating. Copper demand is expected to double from 25 million metric

tonne The tonne ( or ; symbol: t) is a unit of mass equal to 1000 kilograms. It is a non-SI unit accepted for use with SI. It is also referred to as a metric ton to distinguish it from the non-metric units of the short ton ( United State ...

s in 2022 to over 50 MMT by the year 2035.

Nickel

In March 2022

nickel Nickel is a chemical element with symbol Ni and atomic number 28. It is a silvery-white lustrous metal with a slight golden tinge. Nickel is a hard and ductile transition metal. Pure nickel is chemically reactive but large pieces are slow ...

prices spiked higher over fear of the

as Russia produced 15.2% of world nickel in 2021.

Tin

Prices of

tin Tin is a chemical element with the symbol Sn (from la, stannum) and atomic number 50. Tin is a silvery-coloured metal. Tin is soft enough to be cut with little force and a bar of tin can be bent by hand with little effort. When bent, t ...

were up 79% in 2021 because of high demand for

circuit board A printed circuit board (PCB; also printed wiring board or PWB) is a medium used in electrical and electronic engineering to connect electronic components to one another in a controlled manner. It takes the form of a laminated sandwich struc ...

Titanium

Demand for

titanium Titanium is a chemical element with the Symbol (chemistry), symbol Ti and atomic number 22. Found in nature only as an oxide, it can be reduced to produce a lustrous transition metal with a silver color, low density, and high strength, resista ...

is high because defense spending increases on and resulting from the

Russo-Ukrainian War The Russo-Ukrainian War; uk, російсько-українська війна, rosiisko-ukrainska viina. has been ongoing between Russia (alongside Russian separatists in Ukraine) and Ukraine since February 2014. Following Ukraine's Rev ...

, parts for aircraft makers and

defense contractors Defense or defence may refer to: Tactical, martial, and political acts or groups * Defense (military), forces primarily intended for warfare * Civil defense, the organizing of civilians to deal with emergencies or enemy attacks * Defense industr ...

; additionally, automotive industry demand for

titanium dioxide Titanium dioxide, also known as titanium(IV) oxide or titania , is the inorganic compound with the chemical formula . When used as a pigment, it is called titanium white, Pigment White 6 (PW6), or CI 77891. It is a white solid that is insolub ...

pigments remains high.

Rolled Steel

Hot-rolled steel prices hit close to $2,000 per

in 2021.

Palladium

Palladium Palladium is a chemical element with the symbol Pd and atomic number 46. It is a rare and lustrous silvery-white metal discovered in 1803 by the English chemist William Hyde Wollaston. He named it after the asteroid Pallas, which was itself na ...

is used widely in

catalytic converter A catalytic converter is an vehicle emissions control, exhaust emission control device that converts toxic gases and pollutants in exhaust gas from an internal combustion engine into less-toxic pollutants by catalysis, catalyzing a redox chemic ...

s to curb harmful emissions from car

exhaust Exhaust, exhaustive, or exhaustion may refer to: Law *Exhaustion of intellectual property rights, limits to intellectual property rights in patent and copyright law ** Exhaustion doctrine, in patent law ** Exhaustion doctrine under U.S. law, in ...

. Russia produces 40% of all palladium in the world, and the

has rattled the palladium market.

Rhodium

Rhodium Rhodium is a chemical element with the symbol Rh and atomic number 45. It is a very rare, silvery-white, hard, corrosion-resistant transition metal. It is a noble metal and a member of the platinum group. It has only one naturally occurring i ...

is used widely in automotive

s. Many countries have agreed to the

Paris climate accord The Paris Agreement (french: Accord de Paris), often referred to as the Paris Accords or the Paris Climate Accords, is an international treaty on climate change. Adopted in 2015, the agreement covers climate change mitigation, adaptation, and ...

to cut car emissions and have higher standards for exhaust.

South Africa South Africa, officially the Republic of South Africa (RSA), is the Southern Africa, southernmost country in Africa. It is bounded to the south by of coastline that stretch along the Atlantic Ocean, South Atlantic and Indian Oceans; to the ...

produces 80-90% of Rhodium each year. Russia is the second largest producer of rhodium but it is around 1%. The COVID-19 pandemic in South Africa caused the country to enact

lockdown A lockdown is a restriction policy for people, community or a country to stay where they are, usually due to specific risks (such as COVID-19) that could possibly harm the people if they move and interact freely. The term is used for a prison ...

restrictions in March 2020 and again in December 2020 - March 2021. This affected the supply of Rhodium causing the price to increase.

Gold

Gold started to increase in price at the start of the

as stocks sunk initially; gold is commonly seen as a safe haven from inflation and stock volatility. Gold crossed the $2,000 mark for the first time in August 2020 and again in March 2022.

Iron ore

China is the number one consumer of iron ore, importing 80% of all internationally traded iron ore. The price has been very volatile because of curbs the CCP has placed on the

steel industry Steel is an alloy made up of iron with added carbon to improve its strength and fracture resistance compared to other forms of iron. Many other elements may be present or added. Stainless steels that are corrosion- and oxidation-resistant t ...

to meet emission standards. Australia,

Brazil Brazil ( pt, Brasil; ), officially the Federative Republic of Brazil (Portuguese: ), is the largest country in both South America and Latin America. At and with over 217 million people, Brazil is the world's fifth-largest country by area ...

, and China are the top three producers of iron ore.

Cotton

In the Western United States there have been persistent droughts in the 2020s hurting cotton yields among other agricultural products.

References

{{Financial bubbles Commodity booms Open economy macroeconomics 2000s economic history 21st-century economic history