Russia-Ukraine peace talks slow commodity rally

The Russia-Ukraine peace talks and rising COVID-19 cases in China have slowed last week's commodity rally.

Analysts said that volatility in commodity markets continued in parallel with developments regarding the Russia-Ukraine war and inflationary concerns.

Representatives from Russia and Ukraine met in Istanbul last week and agreed to reduce military actions in the cities of Kyiv and Chernihiv.

Mikhail Podolyak, advisor to the Ukrainian Presidential Office, stated that the results of the negotiations were sufficient for a meeting at the level of the heads of state.

Although the aforementioned statements brought relief in the markets, messages from the two sides led to a decrease in risk appetite throughout the week.

The hawkish stance of the US Federal Reserve (Fed) was also among the important reasons putting pressure on commodity prices last week.

- Oil and gas

Brent oil's price decreased by 10.7% to $104 per barrel at the opening of the new week thanks to the US' statement that it will supply 180 million barrels of oil during the coming six months.

Despite the selling pressure in the commodity market last week, the natural gas prices increased, up by 2.7% in New York Mercantile Exchange.

Russian President Vladimir Putin signed a decree requiring "unfriendly" countries to pay for Russian gas in rubles.

Stating that Russian gas contracts will be stopped unless payment is made in rubles, Putin announced that the decree will come into effect as of April 1.

After the decision, the announcement that countries such as Germany and France would not pay in rubles created uncertainty in the energy markets.

- Precious metals

In line to the selling trend in the commodity market, precious metals also decreased last week.

The ounce price of gold closed the week at $1,922.7, down 1.8%, after the positive developments in the negotiations on the Russia-Ukraine war.

Silver fell 3.6%, palladium 2.5% and platinum 1.5% last week.

Copper depreciated 0.5%, aluminum 3.5% and nickel 6.3%.

There were also sharp decreases in agricultural commodities last week.

- Agricultural commodities

In addition to the positive developments regarding the negotiations, the increased production forecasts and the decrease in oil prices also affected agricultural commodities.

The price of wheat, traded on the Chicago Mercantile Exchange last week, fell 10.8%, soybean 7.5%, corn 2.7% and rice 1.5%.

Wheat prices fell below $10 for the first time since March 2.

Cotton prices, which reached the highest level since May 2011, closed the week with a loss of 0.8% and sugar also lost 1.4%.

Coffee closed the last week with a 3.1% increase.

*Writing by Gokhan Ergocun