This is what the omikron variant does with the commodities market

The introduction of the omikron variant of the coronavirus, which originates from South Africa, led to considerable unrest on global commodity markets last week. "This variant poses a major risk worldwide, especially in view of the unprecedented number of mutations," the World Health Organization said on Monday, November 29. That news had an immediate effect. The stock markets opened sharply lower and the commodity rally temporarily came to a standstill.

Downward movements
On the CBoT in Chicago, soybean prices fell last week. On Friday, November 26, the price dropped to $12,52 per bushel. Earlier that week the quotation was still at $12,73 per bushel. And at the end of September it was still trading at $12,77 per bushel. The price is now around $12,44 per bushel. Soy oil became 0,8% cheaper last week. The wheat quotation also fell due to the uncertainties associated with the omikron variant. The March wheat contract fell to $8,40 per bushel. On Tuesday, November 23, the CBoT quotation for wheat was still at $8,56 per bushel. Wheat was at $3 per bushel on Friday, December 7,94. So there has been no recovery yet.

De oil prices fell – after the emergence of the virus variant – to the lowest daily level since July. On Wednesday, November 24, Brent oil was quoted at $82,26 per barrel. That was $26 per barrel a few days later (on Friday, November 72,89). Analysts worry that current production levels could create a surplus, which could put pressure on oil prices. Other traders take into account that international (air) passenger transport will suffer and that the demand for fuels will therefore decrease. At the beginning of December the market has not yet recovered. The listing closed on Friday, December 3 at $71,14 per barrel.

The contracts for both raw sugar and white sugar also fell. For raw sugar contracts – with delivery in March – a minus of 2,8% was recorded, to $0,19 per pound on Friday, November 26. Earlier that week, the highest level in more than four years was reached, namely $0,21 per pound. White sugar futures fell to their lowest since October that same week, reaching $26 per tonne on Friday, November 501,40. A decrease of 1,9% compared to a few days earlier.

Coffee futures – both Arabica and Robusta – reached their highest level a few weeks ago ten years time. That was short-lived; the introduction of the omikron variant ensured this. Arabica prices fell by just over 1% to $5,38 per kilo. On Friday, December 3, the quotation closed at $5,38 per kilo. Robusta fell from $2,33 per kilo to $2,31 per kilo. Today that quotation stands at $2,39 per kilo and is therefore one of the few raw materials that has risen again. The shortage of Robusta beans from Vietnam is the reason for this. Although coffee suffered somewhat less from the introduction of the omikron variant.

Cocoa fell to its lowest level since July on Friday, November 26. On Tuesday, November 23, the quotation on the Intercontinental Exchange (ICE) was $2.292 per tonne. At the end of the same week, 'only' $2.166 per tonne remained. A decrease of almost 6%. The introduction of the omikron variant came as a bolt from the blue on the cocoa market. After all, demand had just revived a bit. Various analysts now expect that there will be a greater oversupply at the end of the season.

Uncertainty persists
It is now clear that the symptoms of the omikron variant are less severe than those of the delta variant. However, as can be read above, this has not yet led to much recovery in prices. Buyers, sellers and other parties are waiting. In many countries, measures to contain the virus have been increased again, which is impacting consumer spending. The question is whether the holidays can change that.