Losses in Brent crude exceed 8 percent

Following China's lifting of Covid-19 measures, the uncontrolled rise in case numbers increased risk perception in the commodity market, while forward guidance from US Federal Reserve (Fed) officials and recession concerns were also among the significant factors that exerted pressure on the commodity market last year.

The effects of concerns that the world's leading central banks might implement "hawkish" policies for longer than expected were felt throughout the year.

Uncertainties regarding the Chinese economy were also among the prominent factors in the commodity market. In particular, global banking sector troubles and uncertainties regarding monetary policies led to product-based divergence.

The debt ceiling crisis in the US, the inflation and recession dilemma, and geopolitical risks also caused sharp fluctuations in the commodity market.

Developments stemming from the Israel-Palestine conflict were also among the important factors affecting the commodity market.

While expectations that the Fed had reached the end of its interest rate hikes toward the end of the year were supportive for the commodity market, the persistence of concerns regarding global economic activity could not prevent the selling pressure in the commodity market.

The decline in palladium drew attention

Last year, a downward trend was observed in precious metals, with the exception of gold. The year ended with gold gaining 13.14 percent in value, while silver lost 0.6 percent, platinum 7.4 percent, and palladium 38.6 percent.

In 2023, palladium tested its lowest level since August 2018 at 924.26 dollars.

The ounce price of gold achieved its highest annual close of all time at 2062.74 dollars.

The ounce price of gold rose after 3 years due to "dovish" expectations regarding the Fed, geopolitical risks, and the decline in the dollar index.

As expectations that central banks could begin "dovish" monetary policies in 2024 increased, it stood out in global markets that the Fed, in particular, signaled that it could take action for interest rate cuts in 2024, and that the data released supported hopes for a "soft landing" in the economy.

Fed Chair Jerome Powell stated in his remarks at the Fed's most recent interest rate decision meeting that they believe the policy rate is likely at or near its peak in the tightening cycle, and although bank officials do not find further interest rate hikes appropriate, he also did not want to take that possibility off the table.

While the strengthening of "dovish" expectations supported the ounce price of gold, the decline in bond yields also continued to suppress the alternative cost of gold.

Although the US 10-year bond yield, which finished 2022 at 3.88 percent, saw levels above 5 percent, it retreated from these levels and finished 2023 at almost the same level, 3.8810 percent.

On the other hand, the concern that the Israel-Palestine conflict could spread to a wider area increased demand for safe-haven assets.

The wedding season in India, the Christmas period in the Western world, and the arrival of the new year in China were also effective in increasing demand.

The ounce price of gold, which saw a record level of 2145.12 dollars during the year, increased by 13.11 percent last year to 2062.74 dollars and made the highest annual close of all time. Thus, gold brought a smile to its investors after 3 years.

Analysts said that the persistence of question marks regarding Taiwan on the Chinese side also highlighted gold's safe-haven feature.

The fact that Asian central banks took measures to protect their currencies during the year was also among the factors supporting gold.

Concerns that the global economy would slow down in 2023 also supported gold. Global recession risk and concerns and uncertainties regarding the course of monetary policies affected the ounce price of gold in an upward direction.

News that the Central Bank of China continues to increase its gold reserves contributed to gold's high performance, while investors turned to safe-haven gold following the bankruptcy of SVB and Signature Bank.

The persistence of concerns regarding global economic activity continued to negatively affect palladium prices.

On the other hand, the increasing demand for electric vehicles also caused palladium prices to fall.

Analysts stated that palladium is used in the production of catalytic converters in cars, and that with the increase in demand for electric vehicles, estimates that demand for normal cars could fall have increased, and that demand concerns in palladium have come to the fore.

Palladium was among the commodities most affected by recession concerns. Concerns about a global supply surplus caused the price of palladium to decline.

As a slowdown began to be seen in economies with rising interest rates, this slowdown also affected demand in both the automotive sector and other areas.

After electric vehicles began to come to the fore more, the products used in the automotive sector changed, and palladium demand fell accordingly.

Ongoing concerns regarding the Chinese economy also affected palladium in a downward direction.

Sharp declines were seen in base metals except copper

Looking at base metals, while copper gained 1.8 percent in value in the over-the-counter market last year, lead fell by 12.7 percent, aluminum by 15.9 percent, nickel by 44.6 percent, and zinc by 17.8 percent.

Copper saw its highest level since June 2022 at 4.29 dollars last year.

The slowdown in global economic activity brought demand concerns in base metals to the fore. The decline in the manufacturing industry in China affected base metals. Increasing recession concerns, especially in Asia, were also effective in the decline in base metals.

Weak global demand created pressure on prices as well as investors' sentiment toward industrial metals.

China's easing of strict Covid-19 restrictions increased demand for copper, especially with incentives for the housing sector. Concerns about supply in copper also came to the fore.

The problems that Canada-based First Quantum experienced with the Panamanian government regarding the copper mine it operates in Panama had also triggered supply concerns. The European Union (EU) designated copper and nickel as strategic metals in the European Critical Raw Materials Act. This decision by the EU reflected positively on copper.

News that workers at the Las Bambas copper mine in Peru went on strike and that First Quantum Minerals could end its operations in Panama also brought supply concerns in copper to the fore and were among the factors that caused prices to rise.

Low processing fees negotiated between Chinese smelters and miners for deliveries to take place in 2024 increased supply concerns in copper.

Chinese smelters agreed to reduce these fees to 80 dollars and 8 cents, respectively, for 2024, despite hoping for a change in the fees for converting concentrates into refined metal, which were 88 dollars per ton and 8.8 cents per pound.

This decline, which occurred for the first time in the last three years, fuels concerns that supply shortages could emerge in copper markets.

Stock replenishment efforts in China and increasing physical demand are also positively affecting copper prices. Analysts stated that moves toward renewable energy, which are estimated to increase globally, could also reflect positively on copper demand.

Sharp fluctuations were seen in the nickel market last year due to news regarding the Singapore-based commodity company Trafigura.

While it was stated that Trafigura faced a loss of half a billion dollars due to fictitious nickel exports, the company had claimed that it was the victim of a "systematic fraud."

The commodity giant, which announced that they had recently discovered the fraud, announced that it had initiated legal action against a group of companies "linked" to Dubai-based metal trader Prateek Gupta and that "appeared to be subject to audit." Among the companies sued were TMT Metals and UD Trading Group.

In Trafigura's statement, it was stated that a small portion of the containers purchased from the companies in question since December had been inspected and that the containers did not contain nickel. The company had also reported that most of the shipments were in transit and were "awaiting further inspection."

Analysts said that there is an intense supply of nickel originating from Indonesia.

Russia-based mining company Norilsk Nickel predicted that the global nickel supply surplus would exceed 250 thousand tons in 2023. Before this, the company's estimate was 200 thousand tons.

Losses in Brent crude exceed 8 percent

In the energy group, Brent crude lost 8.8 percent and natural gas traded on the New York Mercantile Exchange lost 44.2 percent in value. The barrel price of Brent crude tested its lowest level since December 2021 at 70.085 dollars last year.

Despite concerns that the escalation of tension in the Middle East due to the conflicts between Israel and Palestine would negatively affect global oil supply, the expectation of recession in world economies, mixed signals regarding economic and demand recovery in China, the world's largest oil importer, led to uncertainty, while the increase in oil stocks in the US put pressure on Brent crude.

News flow regarding the US selling oil from its strategic petroleum reserve to the market was effective in the decline in Brent crude prices. The decrease in new loans given to businesses in China and the fact that economic concerns in the US negatively affected the demand outlook also triggered the declines in Brent crude.

The US administration's suspension of some sanctions it had imposed on Venezuela's oil sector after the government in Venezuela reached an agreement with the opposition to hold elections in 2024 was also effective in the decline of the Brent crude price.

The weakness in economic activities in Europe also played an important role in Brent crude losing value.

In the decline in natural gas prices, weather conditions that kept natural gas consumption relatively low, and therefore the refilling of gas storage facilities in many countries and more liquefied natural gas (LNG) imports were effective. In particular, saving on natural gas in the industry, which produces less due to cost, affected the decline in prices. While the decrease in electricity generation in the US negatively affected natural gas demand, high stocks caused by weak heating demand during abnormally mild winter months continued to lower natural gas prices.

A volatile course was seen in the agriculture group last year

In 2023, wheat traded on the Chicago Board of Trade lost 20.7 percent, corn 30.6 percent, soybeans 14.8 percent, and rice 4.2 percent in value. Wheat tested its lowest level since September 2020 at 0.5400 dollars, and corn tested its lowest level since December 2020 at 4.61 dollars.

While cotton traded on the Intercontinental Exchange, a commodity exchange operating in the US, lost 2.8 percent in value, prices increased by 12.6 percent in coffee, 8.6 percent in sugar, and 61.4 percent in cocoa.

Cocoa saw a historical peak at 4343 dollars per ton. Sugar tested its highest level since October 2011 at 0.2814 dollars. Cotton, on the other hand, saw its lowest level since November 2022 at 0.7477 dollars.

Last year, declines were seen in wheat, corn, and rice as the extension of the Black Sea Grain Corridor Agreement reduced concerns about supply.

The announcement by the government in Argentina that it would devalue the Argentine peso by more than 50 percent against the dollar and restrict public spending as part of the fight against the financial crisis suppressed wheat and corn prices. With the decision to devalue the peso, it is estimated that inflation in the country could rise and wheat and corn stocks could increase due to high prices.

Wheat prices fell with the entry of cheap Russian grain into the market. The increase in corn plantings in the US and the decline in oil prices also suppressed corn prices.

Cheap supply, especially from Brazil, affected soybean prices in a downward direction.

Cotton prices fell as a result of the increase in demand concerns along with global recession concerns.

Analysts stated that forecasts that sugar production in India would decrease caused a rise in prices, and that there is concern that global supply problems could be triggered by the decrease in sugar yield in the country.

Reminding that India is the world's largest sugar producer and Brazil is the world's largest sugar exporter, analysts emphasized that developments in these two countries are therefore effective on prices. Expectations that sugar beet production in France has fallen to its lowest level in the last 14 years also triggered supply concerns regarding sugar.

Concerns that the El Nino weather event would negatively affect sugar production also affected sugar prices in an upward direction. Sugar prices rose with expectations of lackluster supply from other countries, including Pakistan and Thailand.

Alvean, a Switzerland-based firm and one of the world's leading sugar trading companies, had announced that it expects a deficit in sugar as the poor outlook in Indian crops pulls down global sweetener stocks.

In the rise in coffee prices, the sharp decline in global production and the increasing demand for coffee beans in international markets were effective.

Weather conditions in Brazil affected coffee prices. With news that the soil moisture rate in coffee-growing areas in the country has reached a 7-year high, production concerns regarding coffee increased and a rise was recorded in coffee prices. Analysts said that increasing concerns regarding the coffee supply chain after the election in Brazil also rose. Meanwhile, energy, labor, packaging, and packing costs also triggered the rise in coffee prices.

Coffee prices are also receiving support from concerns that the ongoing dry weather in Brazil will negatively affect the coffee crop.

Cocoa prices received support from concerns about the quality of some West African cocoa crops. The war in Ukraine became a major problem for cocoa farmers due to the lack of fertilizer and pesticides, as Russia restricted global exports of potash and other fertilizers. Cocoa prices also rose following news that some cocoa exporters in Ivory Coast were about to default on their contracts due to a shortage of cocoa beans.

While concerns that the monsoon weather event could damage production caused cocoa prices to rise, news that Nigeria's cocoa exports have fallen also brought supply concerns in cocoa to the fore.

Strong chocolate demand supported cocoa prices.

Heavy rain, which has been seen recently in West Africa and accelerates the spread of black pod disease that causes cocoa beans to blacken and rot, was another factor that caused cocoa prices to rise.

Analysts stated that the spread of the disease in excessively rainy weather could cause a decline in the crop quality and production of cocoa, and reminded that cocoa deliveries from farmers in Ivory Coast have also recorded a decline since the beginning of the year.

Cocoa prices rose due to the devaluation of Nigeria's currency, the Naira, and the shortage of cocoa beans in the country.

The announcement by the Brazilian Ministry of Agriculture that a mild cocoa mosaic virus had been detected in orchards in Bahia, the state that produces the country's largest chocolate-making raw material, also caused cocoa prices to increase.

After the European Parliament approved the law that includes banning the import of products produced by damaging forests to European Union countries, concerns increased that this situation could increase the costs of the chocolate industry in the region.