(Bloomberg) -- The world's commodities markets are staging a comeback as the global economy rebounds back from the steepest downturn since the Great Depression.
The Bloomberg Commodity Spot Index rose 1.3% on Thursday to its highest since 2014 with the roll out of Covid-19 vaccinations and the transition to a new U.S. president well underway. That has Wall Street regaining its appetite for risk, delivering commodities their best run in years. Copper, long seen as a bellwether for the global economy, is surging; oil is recovering from the worst effects of the lockdowns; and extreme weather and strong Chinese demand are driving up crop prices around the world.
It's a staggering turnaround from the depths of the pandemic, when crude plunged into negative territory for the first time as traders ran out of space to store unwanted supplies while base metals plummeted to multiyear lows as entire economies shut down.
The rally may have further to run. Goldman Sachs Group Inc. said just weeks ago that recent gains are just the start of a “much longer structural bull market” in commodities. Bank of America Corp. more recently said it sees “modest” gains across the board in 2021 as the world economy bounces back from the steepest downturn since the Great Depression.
On Thursday, the global oil benchmark climbed above $50 a barrel for the first time since early March. Breakthroughs on Covid-19 vaccines are reshaping the futures contracts curve into a bullish backwardation structure, signaling expectations of tighter supply and stronger demand as more people resume driving and flying.
Copper, meanwhile, has surged about 70% above its March low to its highest in more than seven years. A weaker dollar has helped, as has a global move toward low-carbon power sources that's driving the metal's use in electronics and alternative-energy equipment. Other industrial metals including aluminum and zinc are rallying on rebounding growth in China, the biggest consumer.
Soybeans and corn have jumped recently after dry crop weather in South America and Europe hit yields while China has bought massive amounts of farm goods from the U.S. Meanwhile, wheat prices have gained recently, partially on worries Russia's efforts to minimize food inflation could include a tax on exports.
The one notable exception has been gold. A traditional haven, the yellow metal has retreated in the last few months after prospects for a successful vaccine boosted global markets. The start of U.S. President-elect Joe Biden's formal transition also reduced its appeal.
Spot gold slipped 0.2% to $1,836.57 an ounce on Thursday amid a continuing stalemate in coronavirus-aid talks among U.S. lawmakers. However, bullion is still heading for its biggest annual gain in a decade.
©2020 Bloomberg L.P.
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