COMMODITIES-Markets jump as Russia’s nuclear alert and Western sanctions raise supply concerns


* Oil and grains rise on Russian nuclear alert and Western sanctions

* Palladium prices rise, gold climbs as West increases sanctions

* Aluminum at a record level, nickel on the rise due to Russian supply concerns

* Food inflation fears as wheat, corn and edible oil prices rise

SINGAPORE, Feb 28 (Reuters) – Global commodity prices rose on Monday with sharp gains in oil, grains, edible oils and metals after Russia put its nuclear deterrent on high alert and the Western countries have imposed tough new sanctions on Moscow after its invasion of Ukraine. .

Brent crude jumped about 4% back above $100 a barrel, palladium jumped 4% and Chicago wheat gained almost 5% as buyers tried to figure out how to go supplies from Russia if sanctions disrupt trade.

Aluminum hit a record high of $3,525 a tonne on the London Metal Exchange, while Malaysian palm oil gained nearly 6%, the ripple effects of Russia’s potential separation from global commodity markets making themselves felt.

“The range of near-term commodity price outcomes has turned extreme, given fears of further military escalation, energy sanctions or the potential for a ceasefire.” Goldman said in a note to clients on Sunday.

The ruble plunged almost 30% to a record high after Western countries imposed new sanctions on Russia, including blocking some banks from the global payment system SWIFT.

Putin upped the ante on Sunday, ordering Russia’s ‘deterrence forces’ – which wield nuclear weapons – to go on high alert, citing statements by NATO leaders and the range of economic sanctions imposed on the Russia by the West. Russia calls its actions in Ukraine a “special operation”.

Brent rose above $100 a barrel as the nuclear alert and bank payment constraints heightened fears that oil shipments from the world’s second-largest producer could be disrupted. Russia accounts for around 10% of the world’s oil supply.

Following the rise in oil prices, Japanese rubber futures rose. Natural rubber is often influenced by energy prices because its rival, synthetic rubber, is derived from crude oil.

In agricultural markets, Chicago wheat posted its biggest one-day gain in a decade on concerns over supplies from the world’s top exporter of the bread-making ingredient, Russia.

Corn gained 4%, while soybeans rose 2.6%.

Russia and Ukraine account for about 29% of world wheat exports, 19% of world corn supply and 80% of world sunflower oil exports.

Malaysian palm oil futures rose for a seventh session in eight, boosted by higher crude and soybean oil prices and fears of reduced solar oil flows from the black Sea.

Metals markets also gained momentum, with palladium surging as sanctions on Russia raised supply issues for the autocatalyst, for which Russia accounts for about 40% of global production.

Fears of supply disruptions also pushed LME aluminum prices to a record high. Russia produces about 6% of the world’s aluminum and accounts for about 7% of the world’s supply of nickel mines.

Aluminum on the London Metal Exchange hit a record high of $3,525 a tonne and nickel rose 1% to $24,615 a tonne, after rising 3% during the session.

(Reporting by Naveen Thukral; editing by Gavin Maguire and Jason Neely)


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