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Uncertainty and volatility characterised most commodities markets during 2021 as firms grappled with fallout from the global pandemic and some severe weather events, including Storm Uri which hit Texas in February 2021. The last quarter of the year saw steep backwardation and extreme price spikes across the complex. However, far more disruption was to come at the start of 2022 as geopolitical risk ramped up ahead of Russia’s March invasion of Ukraine.

The spot price of Brent crude, which averaged $54.77 a barrel (/bbl) in January 2021, reached $83.54/bbl in October, before closing out the year at $74.17/bbl. By the end of January 2022, when the Commodity Rankings closed, Brent had jumped to $86.51/bbl.

Gas prices saw far greater swings. Futures prices on the Dutch TTF gas hub, which opened the year at €17.89 ($19.73) per megawatt hour (/MWh), rose more than 700% to hit €146.93/MWh by December 20, 2021. Throughout the period that the Commodity Rankings survey was live – between November and January – prices traded between a high of €146.93/MWh and a low of €77.01/MWh – a 47% price swing in just a few days.

The metals markets also saw a run-up in prices over 2021 as economies opened up again after lockdowns. Iron ore was the main exception with prices falling back as China’s slowing growth curbed demand. LME tin prices, on the other hand, rose by 88% over 2021, from $21,034 per tonne to $39,635 per tonne.

Volatility on this scale poses enormous challenges to all companies operating in the markets, but particularly to small and medium-sized entities. While hedging becomes increasingly important, it is also more challenging. Firms found some of the hedging strategies that had worked for them in the past were not offering the right amount of protection. In fact, some even created higher levels of risk. The volatility led to a huge increase in margin calls, potentially putting firms in danger of defaulting on their positions.

As the share of renewables ramps up, it is becoming harder for wholesale market participants to forecast demand and resource availability while managing their positions and mitigating market risk

Firms turned to banks, brokers and research providers to help them navigate the new landscape. They needed innovative hedging solutions, as well as dynamic credit, funding and liquidity services.

In addition to Covid-19 and rising geopolitical risk, climate risk and the spread of renewables added further challenges to operating in the market, particularly the power markets. As the share of renewables ramps up, it’s harder for wholesale market participants to forecast both demand and where supply will come from, while managing their positions and mitigating market risk.

The Commodity Rankings give an indication of which firms are likely to have dealt with these issues the best, as market participants vote for their preferred brokers and dealers across the commodities complex. The league tables were dominated again this year by Axpo Group and Engie Global Markets, with the former taking the top spot in oil and energy overall, and the latter scooping first place in power. UBS was number one on the precious metals leaderboard, with TD Bank coming second in precious and first in base metals. BP topped the natural gas tables.

On the brokerage side, SCB Group bagged first place in energy overall, reflecting the importance of environmental trading today, with Tullet Prebon climbing up the ranks from last year to take second place. Blue Commodities, a crude oil and agricultural broker – and a relatively new entrant to the Commodity Rankings – came in third place in the overall energy category.

Elsewhere in the survey, Societe Generale picked up first place for cross-commodity research, while Engie’s Egma platform won the OTC trading platform category.