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S&P Commodities Sector Index up 5.1% in May and 47% YTD as Inflation Rages

Published 06/02/2022, 07:56 AM
Updated 06/02/2022, 12:12 PM
S&P Commodities Sector Index (S&P GSCI) up 5.1% in May and 47% YTD as Inflation Rages

By Sam Boughedda

In a research piece released Wednesday, Fiona Boal, S&P Dow Jones Head of Commodities and Real Assets at S&P Dow Jones Indices, said food and energy inflation concerns drove up the prices of commodities in May.

"Record inflation prints, export embargos and import bans helped the S&P GSCI, the broad commodities benchmark, to post another monthly gain in May, ending the month up 5.1% and bringing its YTD performance to 47.0%," wrote Boal.

She added that the Ukraine-Russia war disrupting the flow of energy and agricultural commodities out of the countries drove energy and grain markets higher. In addition, the prospect of higher interest rates and recession fears continued to pressure metals markets, while the EU agreeing to a partial ban on Russian oil and China lifting some covid-related restrictions also boosted energy prices and helped extend their bull run.

Boal explained that a "growing concern among central bankers and others regarding food security serves to highlight the importance of agricultural commodities to the global economy from both a societal and environmental perspective."

Severe restrictions on wheat exports from Ukraine and Russia, "combined with worsening harvest prospects in China, parts of Europe and the U.S., as well as an export ban by major producer India, have tightened stocks and exacerbated global food supply concerns. As a result, global wheat prices have skyrocketed," concluded Boal.

Energy holds the biggest weighting in the index, with WTI Crude Oil the largest holding.

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