Market Overview:
This week, the markets are experiencing a significant shift.The recent 90-day tariff truce between the U.S. and China has injected a wave of optimism, leading to a rally in equities and a decline in traditional safe havens like gold.However, this newfound optimism is juxtaposed against persistent structural issues in key commodities, notably cocoa and copper, which continue to face supply constraints.
Gold has seen a notable pullback, dropping below $3,050 per ounce, as easing geopolitical tensions reduce its appeal as a safe-haven asset.Conversely, cocoa prices are surging, driven by ongoing supply challenges in West Africa.Copper remains buoyant, supported by robust demand from the energy transition sector and tight inventories.
In the energy sector, oil prices have rebounded to around $66 per barrel, influenced by OPEC+'s strategic production decisions and the broader market's response to the U.S.-China trade developments.Natural gas markets remain volatile, with prices influenced by seasonal demand fluctuations and geopolitical factors.
Agricultural commodities present a mixed picture.Corn futures are under pressure due to trade uncertainties, while soybeans are experiencing a downturn amid oversupply concerns.
Overall, while the tariff truce offers a temporary reprieve, underlying supply-demand imbalances and geopolitical uncertainties continue to shape the commodity landscape.Investors should remain vigilant, as the market's trajectory will depend on the durability of trade agreements and the resolution of structural supply issues.
Oil Market: OPEC+ Strategy Shift Amid Trade Developments
Oil markets are experiencing renewed volatility as OPEC+ adjusts its production strategy in response to evolving geopolitical dynamics.The recent 90-day tariff truce between the U.S. and China has injected optimism into the market, leading to a modest rebound in oil prices.Brent crude futures rose by 0.67% to $64.34 per barrel, while U.S. West Texas Intermediate (WTI) crude increased by 0.79% to $61.50 per barrel.
Despite this uptick, OPEC+ has announced plans to accelerate oil output, potentially adding up to 2.2 million barrels per day by November.This decision reflects internal tensions within the alliance, particularly Saudi Arabia's frustration with non-compliance by other members . Iraq, for instance, plans to reduce its crude oil exports to 3.2 million barrels per day for May and June, down from 3.42 million bpd in March, as part of its commitment to OPEC+ agreements.
Analysts caution that while the tariff truce offers temporary relief, the underlying supply-demand imbalances and geopolitical uncertainties continue to pose risks to the oil market's stability.The upcoming OPEC+ meeting on June 1 will be critical in determining the alliance's production strategy moving forward .
Natural Gas: Volatility Amid Seasonal and Geopolitical Factors
The natural gas market remains highly volatile, influenced by a combination of seasonal demand fluctuations and geopolitical developments.As of May 7, June contracts settled at $3.62 per MMBtu, reflecting a 19.4% decrease since the year-to-date high of $4.49 per MMBtu on March 10.
The recent 90-day tariff truce between the U.S. and China has introduced a degree of optimism, potentially boosting demand in the world's two largest economies.However, the market remains cautious, with analysts highlighting the need for sustained demand growth to support prices.The U.S. Energy Information Administration projects an 8% increase in pipeline exports in 2025, which could provide some support to the market.
Investors should monitor upcoming weather patterns and geopolitical developments closely, as these factors will significantly influence natural gas prices in the coming months.
Precious Metals: Gold Retreats Amid Easing Geopolitical Tensions
Gold prices have experienced a pullback, dropping below $3,050 per ounce, as easing geopolitical tensions reduce its appeal as a safe-haven asset.The recent 90-day tariff truce between the U.S. and China has shifted investor sentiment towards riskier assets, leading to a decline in gold demand.
Despite this downturn, analysts remain cautiously optimistic about gold's long-term prospects.Factors such as persistent inflationary pressures and central bank buying, particularly from emerging markets, could provide support to gold prices in the latter half of the year.
Investors should keep an eye on upcoming economic data releases and central bank policy decisions, as these will play a crucial role in determining gold's trajectory.
Industrial Metals: Copper Tightens as Global Demand Surges
Copper markets are experiencing significant strain due to a confluence of robust demand and supply disruptions.The recent 90-day tariff truce between the U.S. and China has led to a surge in copper shipments to the U.S., causing shortages and price spikes in Europe.Spot markets in Europe, particularly Germany, Livorno, and Rotterdam, have witnessed record-high premiums for immediate delivery, with German premiums reaching $250 per tonne.This disruption stems from traders diverting supplies from Asia and Europe to the U.S., chasing higher prices due to an arbitrage opportunity created by the tariff threat.
On the London Metal Exchange (LME), copper traded at about $9,400 per tonne, nearly $700 less than prices on the U.S. Comex exchange.Aurubis, a major European copper group, reported global surplus demand and limited spot market activity, focusing instead on long-term contracts.The scarcity has led to increased interest in the copper scrap market, where prices have neared parity with LME levels.Despite premiums constituting a small portion of copper’s total cost, end users are feeling the pressure due to broader commodity price increases and high energy costs in Europe.
Analysts project that global copper demand will grow by over 40% by 2040, but supply isn't keeping pace.Meeting this demand may require 80 new mines and $250 billion in investment by 2030 . This structural imbalance suggests that copper prices may remain elevated in the medium to long term.
Agriculture: Cocoa Prices Soar Amid West African Supply Woes
Cocoa prices have reached record highs due to consecutive poor harvests in West Africa, driven by climate change and disease.In Ghana, 81% of the Western North region has been affected by the cacao swollen shoot virus, significantly impacting production.Production in Ghana was further hindered by cocoa smuggling and gold mining.Production generally was also impacted by cocoa growers moving away from growing the crop after deciding it did not pay enough, increased production costs, and poor management of the cocoa industry .
Despite hopes for a better crop in the 2024/25 season, cocoa prices look set to remain high in the medium term due to supply-side constraints and firm demand.Even if supply rebounds slightly, structural issues such as outdated farming practices and ongoing regulatory hurdles may keep prices elevated for the foreseeable future .
Grains: Corn and Soybeans React to Tariff Developments
Corn:Corn futures climbed back above $4.40 per bushel, rebounding from a near two-month low of $4.34 hit on May 8, following news that the U.S. and China agreed to sharply reduce reciprocal tariffs during a 90-day pause after talks in Geneva.Under the deal, U.S. tariffs on Chinese goods will fall from 145% to 30%, while China will lower tariffs on U.S. imports from 125% to 10%.
However, speculators have significantly reduced their bullish positions in CBOT corn futures, cutting net long positions from over 71,000 to just under 14,000 contracts by May 6—their least bullish stance in six months.Concerns over global trade uncertainties have dampened investor sentiment, and daily trade estimates suggest funds are now bearish on corn.
Soybeans:Soybean futures for July delivery jumped 17¼¢ to $10.69 a bushel overnight on the Chicago Board of Trade.Soymeal was up $2.66 to $296.70 a short ton, and soy oil added 1.7¢ to 50.27¢ a pound.
Despite this uptick, global oversupply and flat global demand have driven January 2025 soybean futures down 30%, to $9.95/bu., from last year's $12.95/bu.The USDA projects that U.S. farmers will plant 84 million acres of soybeans, down 3 million acres from last year, and 94 million acres of corn, up 3.4 million acres from last year .
Upcoming Events to Watch
May 13 – OPEC Monthly Oil Market Report (MOMR)
This is the most important scheduled event for energy markets this week. After OPEC+ committed to ramping up production into an already oversupplied market, all eyes are on their demand and inventory forecasts. If they revise demand lower, that could confirm a bearish setup for crude into summer.
May 14 – U.S. Producer Price Index (PPI) & May 15 – U.S. CPI Report
Both inflation reports will be key for the precious metals space. Gold just broke trendline support — a hotter-than-expected print could either reverse that or confirm the breakdown. Also relevant for copper, as inflation pressures feed into expectations for interest rates and industrial activity.
May 16 – China’s Industrial Production and Retail Sales
The market is still betting on a soft Chinese landing, and copper bulls in particular are leaning on continued infrastructure and EV investment. If this data misses, we could see a broad pullback across base metals.
May 17 – ICCO Cocoa Market Update
Cocoa prices are parabolic. The ICCO (International Cocoa Organization) will publish its latest forecast on West African output this Friday. Any further downward revision from Ghana or Ivory Coast could spark another leg up. Watch for speculative activity to jump around this date.
May 20 – USDA Crop Progress Report
Corn and soybean traders should watch this closely. A delay in U.S. planting progress, especially in the Midwest, could turn sentiment quickly. Funds are already light in corn — any bullish surprise could spark a quick rally.
My Personal Take: Why Cocoa is the New Gold
Everyone’s watching gold, but the real story in commodities right now is cocoa.
Cocoa’s breakout isn’t just about weather or disease — it’s a structural crisis. West African production (which accounts for more than 60% of global supply) is collapsing under the weight of aging trees, farmer exits, disease, and political corruption. You can’t solve that in a single crop cycle.
Meanwhile, demand isn’t budging. Chocolate manufacturers are trying to substitute or hedge, but there’s only so much you can do when the futures curve is vertical and the physical market is barely functioning.
I think we’re entering a phase where cocoa trades more like a hard asset than an agricultural one. The chart has gone exponential, but I don’t think the top is in yet. Traders are still underexposed, and hedge funds are just waking up to the structural supply story.
My play? I’m staying long, with trailing stops. This could be 2025’s most explosive chart — and the least understood.
Looking Ahead: My Predictions
- Cocoa hits $12,000 by July
Structural collapse in West African supply + fund momentum = runaway market.
- Copper spikes to $10,200 before June ends
U.S. arbitrage and China scrap squeeze could stretch global inventories to the brink.
- Brent retests $62–63 before OPEC+ meeting
Overproduction and cautious demand forecasts will keep pressure on crude.
- Gold chops between $2,980–$3,100
Not out of the bull trend, but the next leg likely depends on inflation data and central bank language.
- Corn holds $4.30 support, bounces to $4.75 in June
Trade truce is helping, but weather and ethanol are the real catalysts now.
