What’s Going on in Commodities?

There have been some wild swings in many commodities over the last few sessions, with some record-breaking price moves in both directions. This reflects both the uncertainty of the war in Ukraine and the margin calls that are now forcing many participants to cover their derivative positions. While that might have immediate short-term consequences for the solvency of key traders, it has longer term consequences for the intricate web of trade linkages that could soon find that a key source of funding or collateral has suddenly disappeared. These linkages could potentially create domino effects that have a global impact.