The highly unpredictable nature of Russia’s threat against Ukraine is rippling through the commodity complex. In the opinion of strategists at TD Securities, commodities can still see new highs if Russia tensions spiral out of control.

Invasion and resulting sanctions are not broadly priced into the market

“Despite signs that commodity markets have priced some de-escalation in recent days, tight supply-demand fundamentals, and inventories of base metals, oil and other commodities at historic lows, suggest any action or sanctions could send commodity prices surging higher still.”

“Brent could easily challenge $100/b, European natural gas $55/MMBtu, palladium may well test $3,000/oz, with both aluminium and nickel surging materially past their recent highs as well.”

“Natural gas/crude oil-intensive products such as fertilizers, plastics, various other metals are all subject to large price increases should sanctions stay put for a prolonged period. This no doubt would raise inflation fears and could force central banks like the Fed to peruse a much more restrictive policy, than what the market is currently pricing.”