Commodity At Crossroads Amid Trade Wars, Supply Shocks

Global commodity markets are facing a confluence of factors, pushing prices to multi-year highs. Trade tensions, supply disruptions, and weather patterns are creating a volatile environment, demanding close attention. A broad commodity index has surged nearly 8% this year, reaching its highest point in two years, fueled by renewed price pressures and supply chain disruptions stemming from global trade conflicts.

Copper markets are experiencing significant price dislocations due to the threat of tariffs. The potential for trade restrictions has created a record gap between US and global copper prices, triggering a short squeeze in London. The situation highlights the sensitivity of industrial metals to trade policy.

Oil prices are also in focus, driven by Russia’s crude flows and the ongoing war in Ukraine. The spread between near-term and future oil prices has fluctuated significantly, reflecting concerns about supply availability. Oil prices remain elevated near $75 a barrel.

In agriculture, persistent dryness in South America has led to reduced global corn stockpile forecasts. This has pushed corn futures near their highest levels since August 2023, raising concerns about food inflation. The USDA has cited heat and dryness in key growing regions as the primary factor impacting yields.

Finally, despite sustainability efforts, global aviation fuel demand is projected to grow significantly by mid-century. While airlines have set net-zero targets, achieving this goal will require substantial policy intervention and technological advancements, according to analysts. These five charts offer a snapshot of the complex dynamics currently shaping global commodity markets.