Commodity Markets Face Continued Turbulence Amid Geopolitical Instability

Commodity Markets Face Continued Turbulence Amid Geopolitical Instability

Global commodity markets are experiencing significant volatility as geopolitical tensions, trade policies, and economic uncertainties continue to influence prices and trading activities.

Trafigura Reports Market Turbulence and Profit Margins

Global commodities trader Trafigura has forecast continued market turbulence for the latter half of 2025, citing factors such as geopolitical instability, increased tariffs, and inflationary pressures. CEO Richard Holtum highlighted the impact of unpredictable U.S. trade policies and President Donald Trump’s social media activity on market dynamics. Despite these challenges, Trafigura posted a net profit of $1.5 billion for the first half of the year, maintaining performance from a year earlier, and paid a substantial $1.5 billion dividend to its 1,400 employee shareholders. However, profits have shrunk from the energy crisis peaks in 2022–2023, and the outlook remains uncertain. CFO Stephan Jansma emphasized uncertainty in commodity prices, interest rates, and tariffs, noting that policy-driven market shifts are harder to anticipate than typical supply-demand imbalances. Chief economist Saad Rahim further warned of high tariff levels, inflation, weak consumer sentiment, and concerns about U.S. government debt and potential dollar instability. The company is also managing internal transitions following a corruption trial and a $1 billion fraud loss in Mongolia. Additionally, significant payouts are being made to departing executives, including outgoing Chief Risk Officer Ignacio Moyano. Trafigura warns of further ‘turbulence’ in commodities markets

World Bank Predicts Decline in Commodity Prices

The World Bank’s latest Commodity Markets Outlook forecasts a significant decline in global commodity prices over the next two years due to weakening global growth and rising trade barriers. Prices are expected to drop 12% in 2025 and a further 5% in 2026, returning to pre-COVID-19 levels observed from 2015 to 2019. While this trend may help moderate near-term inflation—previously driven by high energy prices and supply chain disruptions—it poses challenges for developing economies reliant on commodity exports. Chief Economist Indermit Gill highlighted the risks of high price volatility and urged developing nations to liberalize trade, strengthen fiscal discipline, and foster private investment. Energy prices, including Brent crude oil and coal, are expected to decline significantly due to ample supply and decreased demand, notably from increased electric vehicle use in China. Food prices are also forecasted to fall, though this is unlikely to alleviate food insecurity in conflict-affected regions. In contrast, gold prices are projected to hit a new record in 2025 amid global uncertainty, before stabilizing in 2026. World Bank sees commodity prices falling to pre-COVID levels

Gold Prices Reach Record Highs

Gold prices have surged to record highs, driven by strong global cues and investor demand for safe-haven assets amid market volatility. According to the All India Sarafa Association, the precious metal of 99.9 percent purity extended gains for the fourth day in a row, rallying Rs 1,300 to hit a fresh peak of Rs 90,750 per 10 grams. This upward trend reflects heightened investor interest in gold as a hedge against economic uncertainties. Gold, silver surge Rs 1,300 to record highs in Delhi on strong global cues

Commodity Traders Expand Global Supply Chain Influence

Leading commodity trading houses—Trafigura, Vitol, Gunvor, and Mercuria—have earned over $57 billion in net profits since the onset of the 2022 energy crisis and are aggressively investing these gains to expand their influence across global supply chains. These firms are utilizing profits to diversify into assets such as power plants, petrol stations, and biofuels, while also strengthening their core oil and metals trading operations. Vitol, with profits exceeding those of BP, has expanded its asset base to own nearly 10,000 petrol stations and significant energy infrastructure across regions including the Mediterranean and Africa. Gunvor and Mercuria are likewise investing in infrastructure like refineries and gas production. Trafigura, while more cautious due to past fraud losses, has reorganized its assets and continues to invest selectively. These expansions aim to boost profitability through enhanced control over physical assets and information advantages, despite rising competition from hedge funds and other market entrants. Experts suggest these investments will reinforce the firms’ core capabilities and extend their market relevance. Commodity traders snap up assets and tighten grip on global supply chains

Archer-Daniels-Midland Focuses on Cost Controls Amid Challenges

Archer-Daniels-Midland (ADM) is focusing on cost control measures as the challenging commodities cycle, which has impacted its profits, is expected to persist into 2025. The global grains trader is contending with low crop prices, uncertainty around biofuels regulations, and potential disruptions due to a possible U.S.-China tariff battle. ADM, along with rivals Bunge and Cargill, has seen profits decline with staple crops’ prices hitting four-year lows due to ample supplies and reduced consumer demand due to inflation. Additionally, federal investigations into accounting irregularities have further pressured ADM, causing a significant drop in its share price this year. ADM CEO Juan Luciano noted that global trade adjustments might ultimately benefit the company, and ADM is preparing for potential shifts in trade flows. Though cautious about providing a 2025 profit forecast due to various uncertainties, ADM remains focused on navigating the evolving global commodity landscape. ADM sees challenges continuing into 2025, focus on cost controls

Cocoa Prices Surge Amid Supply Concerns

In 2024, cocoa and coffee emerged as the top-performing commodities due to global supply deficits, particularly from adverse weather conditions affecting key growing regions like West Africa and Brazil. Cocoa prices nearly tripled, driven by crop losses from adverse weather and other factors in top producers Ivory Coast and Ghana. Conversely, steel-making coal ended as the worst performer affected by slow growth in China, primarily due to a property crisis. Looking ahead to 2025, global trade tensions, a strong dollar, and gold’s appeal as a safe haven are likely to shape the commodities landscape. Oil prices may continue to decline as supply could outpace demand, despite OPEC+ extending production cuts. China’s iron ore prices might fall again as supply increases and demand slows. Gold and silver prices could rise further due to central bank purchases and potential U.S. interest rate cuts. In agriculture, Malaysian palm oil saw significant gains due to weather impacts and Indonesia’s biodiesel mandate, while Tokyo rubber futures also rose. However, soybeans, corn, and wheat faced ample supplies, with wheat prices potentially finding support due to warmer weather in Russia. Brazil is poised to meet rising Chinese soybean demand amid potential trade tensions with the U.S. Cocoa tops global commodities rally for 2nd year, steel ingredients struggle on China demand

As the global commodity markets navigate these complex dynamics, stakeholders remain vigilant, adapting strategies to mitigate risks and capitalize on emerging opportunities.