Trump 2.0: New era for commodity markets?

Uncertainty surrounding the effects a Trump presidency would have on the global economy and weak Chinese growth weighed on industrial metals. Following the elections pressure was felt mostly acutely in the market for copper as the Chinese Yuan depreciated significantly amid worries about a potential trade war between China and the United States. Meanwhile sustained supply bottlenecks for Alumina and improving order books supported the prices of Aluminium and Nickel.

The relentless rise of precious metals has finally given way to a corrective phase in November. Silver prices in particular corrected significantly as worries regarding insufficient supply to satisfy demand from the photovoltaic sector proved unfounded. Gold prices retreated as well in the face of further material appreciation of the US dollar in the wake of the outcome to the elections.

For agricultural commodities, a divergent picture emerged in November. Among grains, corn profited from a downward revision of yield expectations by the USDA while wheat prices suffered in light of strong exports from the Black Sea region and favorable growth conditions across the US plains. The soy complex as well was challenged by an improving yield outlook. Soft commodities tended weaker for the most part with the notable exception of Arabica coffee where prices reached the highest level in forty years following an appreciation by 70% since the start of the year as the supply picture has suffered a sustained global downgrade. Raw sugar prices, on the other hand, declined sharply as indications emerged that excess supply may return next year.

Picard Angst All Commodity Tracker weaker than the basis strategy

Broad commodity benchmarks offered a mixed picture in November. While the broadly diversified Bloomberg Commodity TR index gained moderately by 0.41%, the energy-heavy S&P GSCI Commodity TR index remained virtually unchanged (+0.06%). Our own PACI strategy, on the other hand, suffered a sharp setback losing -3.01%. Among the major contributing factors were the pronounced exposure to precious metals and agricultural commodities (wheat and raw sugar) as well as the strategic exclusion of natural gas from the portfolio. The Picard Angst All Commodity Tracker Plus fund (share class D) declined by -3.55% trailing the base strategy as the adaptive roll and contract maturity selection overlay delivered a negative return contribution for the month.