Home Business NewsCommodities plummet in value amid weakening demand and excess production

Commodities plummet in value amid weakening demand and excess production

by LLB Finance Reporter
3rd Oct 23 10:52 am

As the financial markets continue to experience volatility amidst the ongoing Russo-Ukrainian war, inflation and the cost-of-living crisis, consumers will be interested to note that a range of commodities have fallen in value on the AvaTrade platform over the last week. This includes gasoline, silver and wheat.

Kate Leaman, chief market analyst at AvaTrade, said, โ€œLooking at our most falling table* this week, four of the top five instruments that have seen their prices drop are commodities.

“Both silver and gold have fallen to their lowest levels since March 2023. In fact, GDX lost more than $327 million in September alone.

“Following a selloff in US bonds, gold was negatively impacted, with the USD increasing in value. This is because individuals currently view the currency as a stronger safe-haven asset compared to both gold and silver.

โ€œWhatโ€™s more, wheat has plunged to its lowest level since September 2020. Russia, the worldโ€™s largest grain exporter, has produced a big harvest that is likely to pass the export blockades.

“Ultimately, this higher-than-anticipated production has outweighed demand, leading to a drop in its prices. Elsewhere, the US Department of Agriculture also reported higher production than expected, contributing further to wheat supply outweighing demand and the commodityโ€™s price falling.

โ€œFinally, despite oil experiencing gains recently, gasoline has not mirrored its success. This is due to the seasonal nature of gasoline prices, with prices and demand for the fuel tending to change with the seasons.

The commodityโ€™s price typically drops as we enter the winter months, due to weakening demand and the transition to winter gasoline, which is cheaper than the summer version.โ€

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