Wall Street Bank Warns Of Commodity Price Surge

According to JPMorgan Chase, the price of commodities might rise by 40% if investors raise their allocation to raw materials at a time when inflation is rising. As reported by Bloomberg, despite the fact that allocations to commodities seem to be higher than historical norms, the bank’s analysts believe that the sector is not materially overweight.

In an April 6 memo released by the media, the strategists said that this indicates the possibility for raw commodity price hikes.

According to the authors, given the current climate in which inflation hedges are becoming more relevant, it is feasible that longer-term commodity allocations may eventually increase to above 1 percent of total financial assets globally, surpassing previous highs. A 30 to 40 percent rise in the price of commodities might be expected if all other conditions stay the same.

Financial constraints put on Russia, a significant commodity exporter, have disrupted shipments and worsened the supply shortfall, driving commodities to multi-year highs. Investors are considering restructuring their portfolios between shares, bonds, and raw commodities in order to counteract the rising prices of everything from crude oil to wheat.

Russia’s government said last month that it will restrict the export of some commodities and raw materials in order to defend the country’s security in the face of sanctions linked to Ukraine.

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