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Visualizing the Rise in Commodity Prices

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Rise in Commodity Prices

commodity prices

The Stuff that Makes Everything

If you ever wonder why commodities are important, just think of an object around you and ask yourself—what’s that made of?

From the wires in our electronic devices to the tables in our offices, these raw materials are everywhere. Of late, commodity prices have been surging as the global economy recovers, with rising demand from various industries including infrastructure, construction, and livestock.

The above infographic tracks the futures prices of 10 commodities that have seen significant price increases since January 2020.

Commodity Prices, from Bust to Boom

From lumber for home construction to metals for electronics, commodities across the three categories—agriculture, metals, and energy—have been rallying since hitting pandemic lows around March 2020.

CommodityClosing Price (Jan 1, 2020)Closing Price (May 7, 2020)% Increase
Lumber$406.7 per 1,000 board ft$1,645 per 1,000 board ft304%
Iron Ore$92.6 per tonne$197.7 per tonne114%
Soybean Oil$0.35 per lb$0.65 per lb85%
Corn$3.9 per bushel$7.3 per bushel85%
Tin$17,170 per tonne$30,950 per tonne80%
Soybeans$9.6 per bushel$15.9 per bushel66%
Copper$2.8 per lb$4.6 per lb65%
Lean Hogs$0.71 per lb$1.1 per lb56%
Palladium$1,928 per oz$2,961.5 per oz54%
Silver$18 per oz$27.6 per oz53%

Percentage increases may differ slightly due to rounding.

Among agricultural commodities, the price of lumber futures increased 304% between January 2020 and May 2021, reaching record highs. Food prices have also seen a sharp increase since the halfway point of last year. As of May 7th, the price of corn futures was at $7.3 per bushel, nearing its all-time highs of $8.3 per bushel in 2012. Furthermore, soybean oil prices were also at their highest level in the last decade.

Among metals, iron ore futures climbed 114%, reaching a record high. Tin and copper were also both moving towards all-time high prices as of May 7th, followed by palladium and silver, both of which saw more than a 50% rise in prices since January 2020.

Several commodities are either nearing or have broken past their all-time highs. Why are commodity prices increasing?

Lumber

Lumber—the form of wood that builders use to build and renovate homes—has been the talk of the town due to the massive increase in its price.

This is in stark contrast to 2019 when lumber prices were so low that some sawmill owners were better off ceasing operations. In addition to sawmill shutdowns, outbreaks of a bark-eating species of beetle have destroyed 15 years worth of log supplies in British Columbia, Canada, limiting the supply of lumber.

Meanwhile, home buyers are taking advantage of the low costs of borrowing due to record-low mortgage rates in the U.S. This is driving up the demand for lumber from the housing market, while supply is in a bottleneck.

Corn and Soybeans

Corn and soybeans are common feed grains for livestock, including swine, beef, and poultry.

China—the largest producer and consumer of pork—has been battling outbreaks of African swine fever (ASF) since 2018, losing over 100 million pigs. As the country’s hog-herd recovers from this disease, Chinese demand for corn and soybeans is increasing and supporting higher prices. In fact, China’s corn imports from the U.S. increased 2,072% between 2019 and 2020.

Iron Ore and Tin

The global economic recovery, led by China, is fueling the demand for steel, and in turn, for iron ore. On the supply side, the industry is facing a shortage, with a decline in output from top producer Vale following a disaster at its tailings dam in Brazil.

Tin prices are soaring due to rising demand from consumer electronics amid tightening supply. According to Roskill, pandemic-induced supply disruptions led to a 10% decline in refined tin output in 2020. Additionally, shipping disruptions and low stocks at the London Metal Exchange (LME) are intensifying tin’s supply squeeze.

Copper

Copper’s story is similar to that of iron ore, wherein rebounding economies are boosting demand for the red metal. However, investors are particularly bullish on copper due to its critical role in green technologies, with looming concerns over its long-term supply.

Palladium

Many countries are imposing stricter auto emission standards—and while this may surprise you, it’s driving the demand for palladium. The precious metal is a key ingredient in catalytic converters that turn toxic emissions from gas-powered vehicles into less harmful gases.

Unlike the rollercoaster rides that are commodity prices, palladium prices have been rising for five years straight. What’s more, the palladium market has seen an annual deficit since 2012. And this trend is likely to continue with flooding at palladium mines in Russia expected to cut global supply by 5% in 2021.

The Start of a Commodity Supercycle?

While it’s difficult to predict the sustainability of these high prices, the increase in commodity prices across the board has investors gearing up for a potential commodity supercycle.

Commodity supercycles are decade-long periods during which commodity prices trend above their long-term averages. The last supercycle lasted from 1996 to around 2016, driven by rapid industrialization in Brazil, India, Russia, and China (BRIC economies). Today, governments around the world are adopting mineral-intensive clean energy technologies, which will likely increase the demand for minerals for years to come.

Are we on the brink of a new commodity supercycle?

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Misc

All the World’s Metals and Minerals in One Visualization

This massive infographic reveals the dramatic scale of 2019 non-fuel mineral global production.

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All the World’s Metals and Minerals in One Visualization

We live in a material world, in that we rely on materials to make our lives better. Without even realizing it, humans consume enormous amounts of metals and minerals with every convenient food package, impressive building, and technological innovation.

Every year, the United States Geological Service (USGS) publishes commodity summaries outlining global mining statistics for over 90 individual minerals and materials. Today’s infographic visualizes the data to reveal the dramatic scale of 2019 non-fuel mineral production.

Read all the way to the bottom; the data will surprise you.

Non-Fuel Minerals: USGS Methodology

A wide variety of minerals can be classified as “non-fuel”, including precious metals, base metals, industrial minerals, and materials used for construction.

Non-fuel minerals are those not used for fuel, such as oil, natural gas and coal. Once non-fuel minerals are used up, there is no replacing them. However, many can be recycled continuously.

The USGS tracked both refinery and mine production of these various minerals. This means that some minerals are the essential ingredients for others on the list. For example, iron ore is critical for steel production, and bauxite ore gets refined into aluminum.

Top 10 Minerals and Metals by Production

Sand and gravel are at the top of the list of non-fuel mineral production.

As these materials are the basic components for the manufacturing of concrete, roads, and buildings, it’s not surprising they take the lead.

RankMetal/Mineral2019 Production (millions of metric tons)
#1Sand and Gravel50,000
#2Cement4,100
#3Iron and Steel3,200
#4Iron Ore2,500
#5Bauxite500
#6Lime430
#7Salt293
#8Phosphate Rock240
#9Nitrogen150
#10Gypsum140

These materials fertilize the food we eat, and they also form the structures we live in and the roads we drive on. They are the bones of the global economy.

Let’s dive into some more specific categories covered on the infographic.

Base Metals

While cement, sand, and gravel may be the bones of global infrastructure, base metals are its lifeblood. Their consumption is an important indicator of the overall health of an economy.

Base metals are non-ferrous, meaning they contain no iron. They are often more abundant in nature and sometimes easier to mine, so their prices are generally lower than precious metals.

RankBase Metal2019 Production (millions of metric tons)
#1Aluminum64.0
#2Copper20.0
#3Zinc13.0
#4Lead4.5
#5Nickel2.7
#6Tin0.3

Base metals are also the critical materials that will help to deliver a green and renewable future. The electrification of everything will require vast amounts of base metals to make everything from batteries to solar cells work.

Precious Metals

Gold and precious metals grab the headlines because of their rarity ⁠— and their production shows just how rare they are.

RankPrecious Metal2019 Production (metric tons)
#1Silver27,000
#2Gold3,300
#3Palladium210
#4Platinum180

While metals form the structure and veins of the global economy, ultimately it is humans and animals that make the flesh of the world, driving consumption patterns.

A Material World: A Perspective on Scale

The global economy’s appetite for materials has quadrupled since 1970, faster than the population, which only doubled. On average, each human uses more than 13 metric tons of materials per year.

In 2017, it’s estimated that humans consumed 100.6B metric tons of material in total. Half of the total comprises sand, clay, gravel, and cement used for building, along with the other minerals mined to produce fertilizer. Coal, oil, and gas make up 15% of the total, while metal makes up 10%. The final quarter are plants and trees used for food and fuel.

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Misc

Mapped: The Geology of the Moon in Astronomical Detail

Behold the glory of the Unified Geologic Map of the Moon, which brings decades of data into one map, revealing the potential for exploration.

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Mapped: The Geology of the Moon in Astronomical Detail

If you were to land on the Moon, where would you go?

Today’s post is the incredible Unified Geologic Map of the Moon from the USGS, which combines information from six regional lunar maps created during the Apollo era, as well as recent spacecraft observations.

Feet on the Ground, Head in the Sky

Since the beginning of humankind, the Moon has captured our collective imagination. It is one of the few celestial bodies visible to the naked eye from Earth. Over time different cultures wrapped the Moon in their own myths. To the Egyptians it was the god Thoth, to the Greeks, the goddess Artemis, and to the Hindus, Chandra.

Thoth was portrayed as a wise counselor who solved disputes and invented writing and the 365-day calendar. A headdress with a lunar disk sitting atop a crescent moon denoted Thoth as the arbiter of times and seasons.

Artemis was the twin sister of the sun god Apollo, and in Greek mythology she presided over childbirth, fertility, and the hunt. Just like her brother that illuminated the day, she was referred to as the torch bringer during the dark of night.

Chandra means the “Moon” in Sanskrit, Hindi, and other Indian languages. According to one Hindu legend, Ganesha—an elephant-headed deity—was returning home on a full moon night after a feast. On the journey, a snake crossed his pathway, frightening his horse. An overstuffed Ganesha fell to the ground on his stomach, vomiting out his dinner. On observing this, Chandra laughed, causing Ganesha to lose his temper. He broke off one of his tusks and hurled it toward the Moon, cursing him so that he would never be whole again. This legend describes the Moon’s waxing and waning including the big crater on the Moon, visible from Earth.

Such lunar myths have waned as technology has evolved, removing the mystery of the Moon but also opening up scientific debate.

Celestial Evolution: Two Theories

The pot marks on the Moon can be easily seen from the Earth’s surface with the naked eye, and it has led to numerous theories as to the history of the Moon. Recent scientific study brings forward two primary ideas.

One opinion of those who have studied the Moon is that it was once a liquid mass, and that its craters represent widespread and prolonged volcanic activity, when the gases and lava of the heated interior exploded to the surface.

However, there is another explanation for these lunar craters. According to G. K. Gilbert, of the USGS, the Moon was formed by the joining of a ring of meteorites which once encircled the Earth, and after the formation of the lunar sphere, the impact of meteors produced “craters” instead of arising from volcanic activity.

Either way, mapping the current contours of the lunar landscape will guide future human missions to the Moon by revealing regions that may be rich in useful resources or areas that need more detailed mapping to land a spacecraft safely .

Lay of the Land: Reading the Contours of the Moon

This map is a 1:5,000,000-scale geologic map built from six separate digital maps. The goal was to create a resource for science research and analysis to support future geologic mapping efforts.

Mapping purposes divide the Moon into the near side and far side. The far side of the Moon is the side that always faces away from the Earth, while the near side faces towards the Earth.

The most visible topographic feature is the giant far side South Pole-Aitken basin, which possesses the lowest elevations of the Moon. The highest elevations are found just to the northeast of this basin. Other large impact basins, such as the Maria Imbrium, Serenitatis, Crisium, Smythii, and Orientale, also have low elevations and elevated rims.

Shapes of Craters

The colors on the map help to define regional features while also highlighting consistent patterns across the lunar surface. Each one of these regions hosts the potential for resources.

Lunar Resources

Only further study will resolve the evolution of the Moon, but it is clear that there are resources earthlings can exploit. Hydrogen, oxygen, silicon, iron, magnesium, calcium, aluminum, manganese, and titanium are some of the metals and minerals on the Moon.

Interestingly, oxygen is the most abundant element on the Moon. It’s a primary component found in rocks, and this oxygen can be converted to a breathable gas with current technology. A more practical question would be how to best power this process.

Lunar soil is the easiest to mine, it can provide protection from radiation and meteoroids as material for construction. Ice can provide water for radiation shielding, life support, oxygen, and rocket propellant feed stock. Compounds from permanently shadowed craters could provide methane, ammonia, carbon dioxide, and carbon monoxide.

This is just the beginning—as more missions are sent to the Moon, there is more to discover.

Space Faring Humans

NASA plans to land astronauts—one female, one male—to the Moon by 2024 as part of the Artemis 3 mission, and after that, about once each year. It’s the beginning of an unfulfilled promise to make humans a space-faring civilization.

The Moon is just the beginning…the skills learned to map Near-Earth Objects will be the foundation for further exploration and discovery of the universe.

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