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Globe and Mail
01-05-2025
- Business
- Globe and Mail
Commodity Market Roundup- April's Top Performers and Underperformers
A weaker dollar index and a decline in the long-term bond prices were competing bullish and bearish factors for commodities in April for the second consecutive month. The June dollar index moved 4.44% lower, while the June U.S. 30-year Treasury bond futures fell 0.80% to 116-26 during the fourth month of 2025. Gold was higher, reaching a new record peak, while the other precious and base metals were lower; grains were mixed with gains in corn and soybeans and a loss in CBOT wheat futures. Animal proteins rallied, while the energy sector was mostly lower. Soft commodities were mixed, with gains in cocoa, FCOJ, and Arabica coffee, while sugar and cotton prices moved lower. The only double-digit percentage gains were in cocoa and FCOJ futures and Bitcoin. Gold reached a new record high in April for the fourth consecutive month. Lumber, crude oil, oil products, and natural gas posted double-digit percentage losses for the month ending on Wednesday, April 30. Stocks and cryptocurrencies were lower in April. New highs in gold- Volatility in copper Gold's ascent continued in April as investors and traders moved to the precious metal as a safe asset. The monthly chart shows gold's rally, which took the price over the $3,500 level to a $3,509.90 high. Gold closed March at just under the $3,320 level, significantly higher than the closing level on March 31, 2025. Meanwhile, copper experienced wild price volatility in April. The monthly chart shows that COMEX copper futures fell from the record high of $5.3700 in March to $4.03 per pound in April. Copper held just above its critical technical support level. As I mentioned in the March Barchart commodity roundup, ' one factor impacting copper prices is the Trump administration's tariff plans. These trade barriers have tightened futures markets, causing metals to move from Europe and other locations to the U.S. ' While COMEX futures reached a record high in March, LME three-month copper forwards did not reach a new all-time peak, which, in hindsight, was a clue that the red metal on the futures exchanged was overdone on the upside. Copper futures plunged to just above the $4 level but finished April down under 10% and above the $4.60 per pound level as the nonferrous metal recovered after a very volatile month. Copper rose to nearly $5 in late April, but the price dropped over 26 cents per pound on the month's final day. Cocoa leads on the upside- Natural gas plunges ICE cocoa futures have been a bullish beast since breaking through the 1977 previous record high in early 2024. In April, cocoa futures led the commodities asset class with a 12.66% rally as supply concerns persisted. The daily July futures chart highlights cocoa's rally from below $8,000 to nearly $8,900 per ton. West African growing conditions continue to plague supplies, keeping prices at record levels compared to the pre-2024 levels. The volatile natural gas futures market posted the most significant decline, falling 21.87% in April. Since peaking at over $5 per MMBtu on March 10, 2025, NYMEX natural gas futures for June delivery plunged in April as the shoulder season between heating and cooling tempered the demand. Meanwhile, at over $3.30 per MMBtu, nearby natural gas prices remain far higher than those at the end of April 2024, which were below the $2 level. Source: EIA The chart shows that, at 1.934 trillion cubic feet for the week ending on April 18, 2025, natural gas inventories across the United States were 19.8% below the same level in mid-April 2024 and 2.2% under the five-year average. Increased demand for LNG has supported natural gas prices. While they fell in April, the energy commodity remained far higher than at the same time in 2024. Energy falls- Agricultural commodities were mostly steady Crude oil plunged with the nearby NYMEX WTI futures dropping 17.96% and the ICE Brent futures posting a 17.47% decline. Gasoline and heating oil futures fell 11.52% and 11.39%, respectively. The outperformance in the oil products pushed gasoline and distillate refining spreads higher. Ethanol prices moved 2.4% higher in April as the 2025 driving season is on the horizon and U.S. gasoline is a blend with biofuel. Meanwhile, Rotterdam coal's price fell 8.62% in April. Grain prices were mixed, with a 1.58% gain in soybeans and a 2.64% increase in corn futures prices. Soft red winter wheat futures fell 3.59 during April as the 2025 planting season began with few supply concerns. Animal proteins posted across-the-board gains, with lean hogs for June delivery leading the way on the upside with a 3.15% gain. August feeder cattle futures rallied 1.91%, while the June feeder cattle were 2.33% higher. The meats rallied as the peak demand season begins in late May, as barbecues come out of storage for the summer grilling season. In other agricultural commodities, cocoa, FCOJ, and Arabica coffee futures posted impressive gains, while sugar and cotton futures were lower. Cotton remains the most inexpensive soft commodity compared to its price action over the past years. Spotlight on tariffs President Trump called April 2, 2025, ' Liberation Day ' as he announced the most significant reciprocal and punitive tariffs in history. The trade barriers caused substantial distortions in markets across all asset classes. Stocks dropped, the dollar index plunged, and the long-bond futures fell. Concerns that a global recession would grip economies caused substantial price volatility in markets across all asset classes, and commodities were no exception. After a period of extreme price variance during the first half of April, markets calmed as the U.S. administration entered negotiations with worldwide trading partners. At the end of April, negotiations continued with no concrete deals on the table. Meanwhile, the most significant issue remains the U.S. trade relationship with China. Stocks, bonds, and commodities finished April above the month's worst levels, but concerns continue to grip markets. Factors to watch in May 2025 As I wrote at the end of March, ' Trends are a trader or investor's best friend in markets across all asset classes, and commodities are no exception.' The potential for extreme price variance persists as the raw materials sector moves into May. Agricultural commodities will follow the weather patterns for directional clues. Meats will move into the 2025 peak grilling season at the end of May, and as the temperatures increase, the demand for cooling could support natural gas. Gasoline demand will increase during the 2025 driving season during late spring and summer. The other issues that could influence commodity prices in May are: The wars in Ukraine and the Middle East and relations between the U.S. and countries worldwide could cause bouts of volatility. U.S. policies under the Trump administration could continue to cause market turmoil. Tariffs are trade barriers that impact global raw material prices, creating distortions that lead to sudden price moves. The administration's negotiations and relations with China could cause sudden price variance. As of the end of March, the Chinese economy remains critical as China is the demand side of the equation for many commodity markets. Volatility in commodities creates trading opportunities. As I wrote in early April, 'Approach markets with a risk-reward plan and stick to the program. Accepting small losses in the quest for oversized gains is always acceptable. Therefore, stick to loss levels when markets move contrary to expectations, but adjust risk-reward dynamics to protect capital and gains when markets move in the desired direction.' Expect continued volatility in the commodities asset class in May and beyond, and you will not be surprised or disappointed. Keep a close eye on grains, gasoline, and meats as they enter their peak demand seasons. The driving season runs through spring and summer, as does the grilling season. Meanwhile, gold remains a bullish beast, but even the most aggressive bull markets rarely move in straight lines. The higher the gold price rises, the greater the odds of a correction.
Forbes
16-04-2025
- Business
- Forbes
What Eddie Murphy And Dan Akroyd Taught Me About Trading
People in my industry were ecstatic to see the film Trading Places, hopeful it would help the public understand what we did. But instead, the film took things in a whole different direction, and it was all because of orange juice. getty When I started my job as a commodities trader at Heinold Commodities in 1983, I was still young, and the bloom was a little bit off the rose. I wanted to spend most of my time researching and analyzing various commodities, but I found I spent more time doing sales. While it wasn't perfect, I was still happy to officially be in the industry. So, while I wasn't going to let myself become a cliche salesman, that did mean I had to get more clients and deliver them solid returns. As long as I did that, I'd be OK—and I was until that summer. That's when Eddie Murphy and Dan Ackroyd changed everything. While I didn't want to be a telemarketer, I did have to play the game. I worked hard trying to build up my research and analytics skills, while also meeting client acquisition requirements through my own methodologies. Then the summer came, and with it, a movie called Trading Places starring Eddie Murphy and Dan Ackroyd. In it, Ackroyd plays a commodities broker who is doing quite well for himself, while Eddie Murphy is a street hustler. A bet between two different rich men causes Murphy and Ackroyd to change places, making Murphy the commodities broker and Ackroyd the hustler. Since commodities were a key part of the film, people in my industry were ecstatic to see it. Maybe now the public would understand what exactly we did. But instead, the film took things in a whole different direction, and it was all because of orange juice. In the movie, some evil speculators want to corner the market on frozen concentrated orange juice (FCOJ) by creating a fake version of the USDA crop report. Whether or not this had anything to do with the next part is pure speculation, but to me at the time, it certainly looked real. Over the next few months, FCOJ futures shot up, and as a result, it was arguably a good idea to short them. We had all seen the movie, of course, which made everyone an expert on orange juice. Next thing I knew, almost the entire firm was shorting FCOJ. Normally, I would spend some time researching the topic, but at this particular moment, there wasn't time. I needed to either get in on the hype or cut bait, and in the end, I caved to peer pressure. I took a small, short position for my clients. I hoped it would work out fine. Christmas day, 1983. Florida, the Sunshine State, which produced (at the time) 60 percent of the US orange juice, had its worst frost in 100 years. FCOJ went to a term called 'limit up,' which is when a commodity price changes the maximum amount allowed in one day before the trading is stopped by the exchange. It did this every day for a solid window of time. It wasn't great. I wasn't in as deep as some of my colleagues, as they had bet the farm. I only bet a shed on that farm, so my clients only took a small loss. But in the end, I shouldn't have lost them anything. I only shorted FCOJ because everyone else was doing it, and had I not hedged, my clients—and me—would have been up a creek. This could have been much worse, and all thanks to a movie. Fortunately, that was now ancient history, which was also now on my mind a bit more. If I wanted to know what my future looked like, maybe I should take some time to look at my past. And that's exactly what I did.
Globe and Mail
03-03-2025
- Business
- Globe and Mail
Commodity Market Roundup- February's Top Performers and Underperformers
A slightly weaker dollar index and a rally in the long-term bond prices did not support most commodities in February. The March dollar index moved 0.61% lower, while the May U.S. 30-year Treasury bond futures were 3.92% higher at 118-13 during the second month of 2025. Gold and copper were higher, while silver, platinum, and palladium futures declined. Crude oil, oil products, ethanol, and Rotterdam coal prices dropped, while natural gas moved nearly 25% higher. Corn, soybean, and wheat futures fell. Sugar and coffee were higher, while the prices of cocoa, cotton, and FCOJ fell, with the OJ falling over 35%. Animal proteins were lower. Lumber prices moved higher. The only double-digit percentage gain was in natural gas, while FCOJ, cocoa, platinum, palladium, Rotterdam coal, cocoa, Bitcoin, and Ethereum posted double-digit percentage losses for the month ending on Friday, February 28. Natural gas prices explode higher Natural gas was the best-performing commodity in February, posting a nearly 25% gain. The monthly chart highlights that U.S. natural gas futures for April delivery rallied from $3.07 at the end of January to $3.834 per MMBtu at the end of February. The other fossil fuel futures and ethanol did not move higher, with Rotterdam coal leading the way on the downside with an over 16% decline. Crude oil and oil products declined, while crack spreads were on either side of unchanged, with a small loss in the gasoline refining spread and a gain in the distillate crack spread. Gold and coffee futures reach new record highs before correcting Gold futures rose to a new nominal record high in February when the continuous futures contract reached $2,974 per ounce. The monthly chart shows gold reaching its record peak before correcting. Meanwhile, silver declined by 3.3% while platinum and palladium fell over 10% and 15%, respectively. COMEX copper futures rose 5.25% in February. The precious metals and copper reflected tariff concerns during the month. ICE Arabica coffee futures were the other commodity that reached a new record peak in February. The quarterly chart shows the explosive rally that took Arabica coffee to nearly $4.30 per pound, almost $1 above the 1977 $3.3750 per pound record peak. Coffee corrected after reaching an all-time high but finished the month with a marginal gain. World sugar futures moved over 3.5% higher, while cocoa dropped over 15%, and cotton futures fell 2.67%. Grains were lower, with losses in corn, soybean, and CBOT wheat futures. Lean hog futures led the meats lower with an over 7% decline, while live and feeder cattle futures moved lower. FCOJ plunged FCOJ futures reached a record $5.4315 per pound high in December 2024. The monthly chart illustrates the significant 35.39% drop in February, taking FCOJ futures to just over $3 per pound on February 28, leading the soft commodities and all commodities on the downside. The beginning of the 2025 planting season in the Northern Hemisphere- Seasonality in energy and meats March is the beginning of spring, meaning that the 2025 planting season in grain and oilseed markets is on the horizon. Farmers will begin planting crops over the coming weeks. Corn, soybean, and wheat prices have declined to levels that could attract buying as the uncertainty of the weather conditions during the 2025 crop year may ignite volatility. Natural gas will move into the injection season after a cold winter, but stocks have dropped to levels that could hold prices steady. The latest EIA data from shows that U.S. natural gas stocks have declined to 23.4% below last year's level and 11.5% under the five-year average for late February. Increasing demand for U.S. LNG and inventory levels could keep a bid under natural gas as the energy commodity heads for the off-demand season. Crude oil's path of least resistance will depend on geopolitical events, but the 2025 driving season begins in the spring, which could cause increasing demand. Meanwhile, the 2025 grilling season begins in late May when beef and pork demand tend to increase. Prices tend to peak during the spring and summer. Factors to watch in March 2025 March tends to come in like a lion and go out like a lamb, which could cause some seasonal volatility in commodity markets. However, three factors will likely cause the most significant price variance over the coming weeks. The wars in Ukraine and the Middle East could cause bouts of volatility. U.S. policies under the Trump administration could cause market turmoil. Tariffs are trade barriers that impact global raw material prices, creating distortions that lead to sudden price moves. The Chinese economy remains critical as China is the demand side of the equation for many commodity markets. Volatility in commodities can create many trading opportunities. Approach markets with a risk-reward plan and stick to the program. Accepting small losses in the quest for oversized gains is always acceptable. Therefore, stick to loss levels when markets move contrary to expectations, but adjust risk-reward dynamics to protect capital and gains when markets move in the desired direction. Expect continued volatility in the commodities asset class in March and beyond, and you will not be surprised or disappointed.
