Commodity snapshot

Our first set of snapshots of the Trump 2.0 era covers a hectic period for markets, including a short-lived US-Colombia trade war, sharp criticism of the US Federal Reserve, and the attempted telephone purchase of Greenland. Agricultural commodities markets have not been immune to the uptick in turmoil, with volatile expectations for significant market-level factors, including inflation, interest rates, and tariffs, laid on top of crop-specific considerations. The S&P GSCI Agriculture Index increased 1.1% WOW led by coffee, wheat and white sugar.

Arabica coffee smashed previous records on a nominal basis. The temporary tariffs on Colombia was a perfect example that coffee is not immune to trade wars. And given ICE has delivery in the US, it is not surprising that the market reacted. Meanwhile, certification in Europe is complicated because of EUDR. Not a great outlook for coffee futures. More importantly, are tariffs on Brazil, Mexico and Vietnam coming up?

G&O markets continue to look for a convincing read on Trump, lurching from rumour to announcement to tweet in the interim. However, life exists outside the Trump vacuum and South American crop concerns continue to attract headlines. Low rainfall in Argentina could well see further crop downgrades in the weeks ahead while the slow pace of safrinha corn planting in Brazil has led to inevitable comparisons with the ill-fated 2020/21 crop.