Heading into the Last Quarter of the Year - Commodities

The current commodity futures landscape looks like a mix of divergent trends, supply disruptions, and macro uncertainties that reflect the tension between demand optimism and economic caution. These times tend to create opportunities if the markets are monitored properly. 

On the energy front, crude oil futures are attempting to stabilize after a shaky stretch - while prices remain under pressure from weak global growth signals and fears of oversupply, bullish forces are emerging. The weakening U.S. dollar is also providing some tailwind to dollar-denominated commodities, making them more attractive to foreign buyers. Also, any potential conflicts overseas may impact energy prices in the coming quarter. 

In the metals, gold is showing strength as investors seek safe havens amid macro risk and dollar volatility. Gold futures have been climbing, supported by concerns over a U.S. government shutdown, rising inflation, and uncertainty around central bank policy. All negative factors. Silver and other metals have likewise experienced gains, benefiting from both industrial demand and speculative flows. Copper has become a focal point, especially after the mining accident in Indonesia produced supply concerns. Markets responded with strong gains in copper futures, reflecting rising fears that tighter supply will stress the balance sheet the rest of the year. Manufacturing data will be important. As more volatility in the currencies may continue, investors will lean more into the metals as longer-term play. 

In agricultural futures, things are mixed. A recent move by Argentina to temporarily suspend its soybean export tax has allowed Chinese buyers to go into the Argentine supply, putting downward pressure on some futures in the soy complex -  while making traders uneasy, sidelining U.S. producers in that trade. Futures across corn, wheat, and soy have experienced large global stocks, uncertainty with demand, weather premium and changing export policies. So, one side of the equation is leading to higher prices while the other side could potentially keep the pressure on.

We are starting to see some interesting trends across commodity markets as we head into the last quarter of 2025, the energies for one, are cycling between backwardation and contango regimes. This is dependent on short-term expectations of tightness vs. oversupply. It's a tug-of-war. When near-term supply risk is elevated, backwardation tends to pop up, when demand is weak and inventories are high, contango takes over. Speculators and hedgers alike are closely watching data like the CFTC’s Commitments of Traders reports to feel out which way may feel the squeeze.