The price of agricultural commodities like wheat, corn and soy have been absolutely soaring lately.

There are a number of factors driving the move, though one contributor is simply the lack of a robust supply response so far to all the demand. Yesterday on TV we spoke with Scott Irwin an agricultural economist at the University of Illinois, who cited surprisingly moderate planting intentions as being a driver of the huge move up in prices since the beginning of April.

Meanwhile, if you haven’t noticed, copper is getting close to trading at $10,000 a ton on the London Metals Exchange.

And as Thomas Biesheuvel reported today, companies and investors are still reluctant to expand mining despite the surge, making the types of long-term bets that would bring on more supply. This of course has the effect of making futures markets tighter, pushing up prices all else equal.

Yesterday I wrote about how prices are high on many goods today because of past choices that reduced supply. But it’s clear that those choices are still being made right now, whether it’s reluctance to invest in new mining capacity, or farmers remaining conservative in their planting decisions.

(Bloomberg) — Investors looking to gauge the strength of the global recovery need look no further than metals markets.

Copper’s at the highest in a decade, aluminum is surging, and iron ore is closing in on a record as steel prices climb. Underpinning gains, which are taking commodities toward the highs of the last supercycle, is growing evidence that the world’s largest economies are shaking off the coronavirus shock and their growth roadmaps will have a decidedly green focus.

The U.S. recovery is accelerating and President Joe Biden’s $2.25 trillion infrastructure plan will highlight sectors like electric cars, driving further gains in commodities critical to the green-energy transition. That’s coming alongside a continued economic boom in China, where a push to reduce emissions is already filtering through to supply cuts for some metals just as demand is picking up.

“Global demand is recovering, led by China, while the green transition is bolstering sentiment further,” Zhu Yi, an analyst with Bloomberg Intelligence, said by phone. “In short, demand will stay resilient, while supply won’t expand, upside momentum will go forward.”

Metals extended their surge at the start of the week. Copper in London was up as much as 1.6% to $9,704 a ton, the highest since 2011. Iron ore in Singapore jumped to the highest since contracts launched in 2013, while Chinese steel futures reached fresh highs.

READ MORE