The blistering run in resource prices has fizzled out over the past couple of weeks, raising doubts over whether a commodities supercycle is in the works.
What has been one of the hottest asset classes in the world coming out of the pandemic has run into a number of obstacles, including efforts by Chinese regulators to cool down commodity speculation, as well as a spike in the U.S. dollar.
The downturn has been widespread across precious metals, industrial metals, agricultural commodities and lumber, which has been an unlikely poster child of the commodity boom.
After hitting a record high of US$1,711.20 per thousand board feet in early May, lumber futures have dropped by nearly 50 per cent. Meanwhile, gold ended last week down by 6 per cent – its biggest weekly decline since the pandemic began. Copper futures are down by 13 per cent in the past month. And contracts tied to corn are down by 17 per cent since the start of June.
And yet, other commodities, such as crude oil, have been curiously resilient. West Texas Intermediate ended the week at slightly less than US$72 a barrel – a level reached on Tuesday for the first time since October, 2018.