Will 2024 be the year of a commodity 'super squeeze’?

It’s official: the global Commodity markets are currently experiencing an unprecedented phenomenon known as a “Super-Squeeze”.  

According to GSC Commodity Intelligence – this phenomenon results from an ever-growing number of macroeconomics factors including supply disruptions, escalating geopolitical tensions, the climate change crisis and energy transition. 

Recent geopolitical conflicts and the ongoing impacts of climate change have contributed to a strain on Commodity markets. Disruptions from events like the Israel-Hamas conflict and the Russia-Ukraine war have hampered global trade, while the consequences of climate change have disrupted supply chains – particularly in the agricultural sector. Additionally, the lack of investment in critical metals, minerals and energy transition materials has further exacerbated the situation. 

The world’s pursuit of a net-zero carbon future is fuelling demand for energy transition metals such as Aluminium, Copper, Cobalt, Nickel, Lithium, Palladium, Platinum, Silver, Uranium and Rare Earths – but the shortage of necessary investments has led to a supply crunch.

One energy transition metal in particular – Uranium, has been dominating headlines since December following a landmark agreement at the COP28 Climate Change Conference to reshape the global energy landscape. 

Last month, almost 200 countries vowed at COP28 to triple their use of Nuclear Energy in a coordinated effort to achieve global net-zero greenhouse gas emissions by 2030.

As demand surges and the world needs more Uranium and lots of it – there’s one big problem! 

Large-scale mining projects to extract key energy transition metals like Uranium can take up to 15-20 years and the last decade has seen a lack of investment in exploration and production.

The COP28 agreement sent Uranium skyrocketing with prices reaching $106 per pound this month – to hit their highest level in 17 years. That's more than a 100% increase from their 2023 low. It is also a whopping gain of over 350% from their 2020 low.

Elsewhere, the Impact of shipping disruptions in the Red Sea combined with the climate change crisis has sent a long-list of Agricultural Commodities on an unstoppable run – with many already notching up impressive double digit gains within the first month of this year.

Cocoa prices have soared to their highest level in 46-years to hit a new all-time record high. While Sugar prices have rallied to a decade high – scoring up a stunning gain of over 450% from their 2020 low. And last, but not least, Robusta Coffee prices have climbed to their highest level in 16-years.

Whichever way you look at it, one thing is clear. Right now we have crisis on top of crisis, which as traders know – translates to opportunity on top of opportunity. While Commodities certainly don’t need a crisis to move higher, they definitely love a crisis! 

It won't take much for Commodity prices to move significantly higher in this current macro-environment and breach new record highs in the coming weeks and months ahead. 

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions: