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How has COVID-19 affected commodity markets

COVID-19 has affected almost all markets, and commodity markets are not immune. Oil, gas, metals, and agricultural products, have all taken a hit as the world economy came to a grinding halt. Many markets have recovered. However, this may become too much of a good thing. After a steep decline back 2020, many analysts worry that the pandemic may have kick started a price uptrend that can continue for years to come, known as a commodities super cycle.

Performance of commodities since the first quarter of 2020

Energy products

The impact of COVID-19 was felt differently across different types of commodities. The price drop was mostly pronounced in energy markets. Future oil contracts, at one point, dropped to below 0, going as far as below minus 40, driven by a diminishing demand and disagreement within and outside the OPEC. Oil consumption was at historic laws, and production dropped as a result (albeit not enough). In later months, however, both recovered. Today, West Texas Oil is trading at above $60 per barrel, and the currencies of oil producing countries such as Canada and Norway have regained their strength.

The return of demand from China has been a major factor in this recovery, which will be likely pushed further as more economies reopen. Natural gas spot prices have also been affected, but they were in decline even before the pandemic. They are currently in a slow uptrend. This trend could continue if efforts to combat climate change prompt companies to use natural gas more as an alternative to other fossil fuels. Both oil and natural gas can be traded via online trading apps for retail investors.

Metal prices

Metals did not receive an equal blow. They have witnessed a small decline but then they quickly recovered. Measured in percentages, prices of metals have risen at a faster rate than those of food and energy commodities. Copper, for example, reached a trough in April 2020, and the copper index from the World Bank reached below 38 points. Five months later, it was trading at above 50. Future copper prices reveal that an uptrend is in progress, which means that most participants expect more demand for copper in the future.

Food prices

Agricultural commodities did not take a severe a hit, either, as the demand for them is not usually very much impacted by lockdowns. Generally, food prices were stable during and following the pandemic, and are now increasing. Food stocks were stable even during the height of the first wave. However, food prices in regions like South Asia, Sub-Saharan Africa, and Latin America, have witnessed inflation. This requires governmental action to ensure food security.

Precious metals

Precious metals were, in fact, the winners in a gruesome situation. They have earned their safe haven status, especially gold, as their prices spiked up. Many investors saw them as a good hedge against both a falling share prices and falling currency values as a result of the stimulus programs implemented by central banks. Gold traded above $2000 in 2020, which is its highest recorded price, but now it has consolidated below $1800. There is no clear impetus for gold to rise sharply in the short term.


Most commodities have recovered from the major impact of COVID-19. The others, however, had flourished and now have consolidated. This recovery may turn into a period of long-term expansion in price, also known as super cycles. The prospects for most commodities, except for safe havens, are quite promising over the long term.


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