The biggest commodity price boom in a decade rolled higher on Monday.
That saw the Aussie dollar push to new multi-year highs overnight, copper again gained, gold bounced back, oil recovered and rose strongly and iron ore surged, with the price of 65% Fe fines hitting a record $US200 a tonne for the first time ever.
The gains helped drag the overnight ASX 200 futures market 17 points higher at 7am – despite a mixed day on Wall Street.
For Australia the gains by the dollar threaten to not only trim export gains, but add to the continuing downward pressure on prices at a time when the Reserve Bank wants to see wage rises and inflation accelerating.
The dollar charged through 79 US cents in offshore trading after briefly rising above that level in Asian dealings.
Around 7am, the currency was at 79.25 US cents and eyeing a move up to 80 cents in the next week as commodity prices continuing to touch multi-year highs.
Iron ore prices gained – the $US2.80 a tonne rise in the price of 65% Fe fines delivered to northern China to $US200 (according to the Metal Bulletin’s Fastmarkets), stood out and will benefit Brazilian shippers, mostly notably Vale.
The price of the 62% Fe product (favoured by Australian shippers) rose $US2.40 a tonne to $US175.96. That’s still a way from the all-time high of $US191.70 a tonne in February, 2011.
The gains in iron ore and copper will put more upward pressure on the share prices of BHP Group, Rio Tinto, and Fortescue on Tuesday after they saw gains of more than 3% on Monday on the ASX.
The Aussie is currently at its highest against the greenback since late 2015. The New Zealand dollar is also around three-year highs against the US dollar.
Oil prices rose about 4% on Monday, driven by the expected slow return of US crude output after last week’s deep freeze in Texas shut in production.
US West Texas Intermediate crude was up more than 4% at 7am Sydney time at $US61.69 a barrel. Brent crude was up by around 3% to settle at $US64.36 a barrel
Gold prices bounced sharply, rising $US31 or 1.7% to $US1,808 an ounce on Comex in New York.
Silver rose by more than 3.5% to $US28.20 an ounce and copper jumped to more than $US4.13 a pound on Comex, up 1.5% on the day.
Copper is up more than 17% so far this year, iron ore (62% Fe fines) is up 9%, oil is up more than 27%, gold is still down 4.9%.
Sugar is at three-year highs, US wheat prices are at their highest since 2014. Australia has just finished its biggest ever wheat harvest with most of it already sold. The harvest totalled 33.3 million tonnes. Canola prices are at near world highs, barley prices are solid as well.
The Aussie dollar is up around 2.22 US cents since the end of 2020 or 2.8% against the US currency.