The commodity boom has impacted businesses with high inflation, while traders and hedge funds have enjoyed it so far.
- Commodities are back, with oil returning to the $75 a barrel level and metal prices hovering around record highs. The Bloomberg Commodities Spot Index, which measures 22 raw material prices, is up 78% from the low in March 2020 during the start of the COVID-19 pandemic.
- The boom has driven companies to absorb most of the impact, with factory inflation hitting decade-highs in several countries. Businesses have been forced to raise prices, impacting the end consumers.
- Physical traders, especially those involved in agricultural commodities and oil, have reported a surge in profits due to the boom as economies recover post-pandemic.
- Hedge funds are also seeing double-digit growth from commodities. The Robin Hood investor conference included a panel on commodities for the first time in at least five years in June.
Commodity bulls believe the boom cycle has just started, and the spike is not transitory.
Source: Bloomberg