Commodities Under Pressure: Oil, Copper, and Agri Facing Challenges

A new week brings new challenges for commodities and the global economy in general. There are numerous catalysts and factors that could force investors and speculators to reposition: the USDA quarterly inventory report, the Chinese national holiday on Wednesday, or possibly a U.S. government shutdown? A government shutdown could delay the release of key data (NFPs, exports, COTs, WASDEs), leaving markets in a vacuum just as funds are in their largest bearish position in the last 12 months.

The combination of extreme positioning, clustered catalysts, and potential data interruptions creates an asymmetric setup worth monitoring. The fundamentals remain unchanged. Geopolitical upheavals are currently having no impact on prices. This is why fiat currencies are depreciating against decentralized currencies, such as gold, silver, or more recently bitcoin. The market is aware of the situation and is correctly pricing it, so it is no surprise that it is reaching new records.

Trump’s unstable trade policy, excessive fiscal deficits, and threats to the independence of the U.S. FED risk serious damage to the dollar. Since January, the dollar has fallen by seven percent on a trade-weighted basis, marking the worst start to the year since 1973. In contrast, the Chinese tightly controlled currency, the yuan, has reached its highest level since Trump was re-elected.

Return of Kurdish Oil

Last week, Brent rose by more than 5 percent, marking its largest weekly gain since June, as ongoing Ukrainian strikes on Russian energy infrastructure reduced fuel exports from the country. Brent crude futures at the start of the new week are trading slightly below the $68 per barrel (bbl) level, after Iraqi Kurdistan resumed crude oil exports on Saturday following a two-and-a-half-year hiatus, and OPEC+ plans another production increase, exacerbating concerns over excess supply.

The agreement between the Iraqi federal government, the Kurdish regional government, and international oil companies operating in the region will initially allow the flow of 180 to 190 thousand barrels per day to the Turkish port of Ceyhan. This comes after U.S. pressure to return Kurdish crude oil to international markets, with volumes expected to eventually rise to around 230 thousand barrels per day. The return of Kurdish oil coincides with OPEC+’s efforts to increase production to further gain market share. Reports indicate that the group is likely to approve an increase of at least 137 thousand barrels per day for November at its meeting later this week.

Shadow Fleet

Russia has easily managed to negate the effects of energy sanctions. The giant shadow fleet created by Russia nullifies the consequences of Western sanctions, which could have long-term effects on the global economy.

The ships of the shadow fleet transport oil from Russia and, in the event of sanctions, simply register under another flag and change names, even concealing the exact location where they loaded the oil. Thus, all these numerous sanctions have not excluded Russia from the oil business. They exclude them from legitimate business. What is happening with the shadow fleet could signify a change in the global trading order, where sanctioned countries like Iran and Russia could supply their oil to India and China. Meanwhile, the shadow fleet is rapidly growing. It currently represents 17 percent of all oil tankers at sea.

European natural gas futures contracts TTF are trading at around 31 to 33 euros per megawatt hour, which is more than 40 percent below the two-year high of 58 euros per megawatt hour from February, with volatility returning to pre-2022 crisis levels as strong storage injections alleviate winter concerns. EU stocks are at 82.3 percent capacity, with France and Italy above 90 percent, and Germany at 76.6 percent. Lower LNG demand in Asia, due to milder cooling needs, has freed up supplies for Europe, supporting price declines.

However, tensions between NATO and Russia continue to pose a risk of supply disruptions, limiting losses. Markets are also monitoring potential sanctions on Russian energy, and Europe will ban imports by sea by 2027. Looking ahead, global LNG liquefaction capacity is expected to increase by 60 percent by 2030, with half coming from the U.S., raising concerns about oversupply. Traders expect demand to lag, putting pressure on lower prices in both Asia and Europe.

Lower Corn Yields

Hedge funds have just placed large bearish bets against agri commodity prices, and the timing is quite interesting. Funds sold $3.9 billion worth of agri futures contracts last week (the largest outflow since March) and now hold a net short position of $3.4 billion across the complex. Funds are generally short 44.5 million tons on corn and wheat, of which 11.4 million tons are corn and as much as 33.1 million tons are wheat. On a weekly basis, prices for wheat and corn on the CBOT have risen by 0.5 percent, while soybean prices have fallen by 1.15 percent.

In the EU, Mars estimates the corn yield at 6.88 tons per hectare, which is 3 percent lower than the average over the last five years. Regarding the harvest in the EU this year, 133 million tons of wheat have been produced, which is 21 million tons more than last year. Corn is expected to be 57 million tons, three million tons less than last year. Barley was at 56 million tons, seven million tons more than last year, while durum wheat was at eight million tons, one million more than last year.

Global prices for palm and soybean oil are expected to rise by $100 to $150 per ton between January and June 2026 due to limited supplies. Both oils will also be supported by likely increases in biodiesel consumption in the U.S., Brazil, and Indonesia, while production growth remains constrained. The global production shortfall is expected to become larger and more significant from January to March. Sunflower oil is trading at a premium over competing soybean oil, but this is expected to disappear. Imports of sunflower oil into India, China, and other key markets are declining, but this trend is expected to reverse once the premium for sunflower oil disappears.

Rising Copper Prices

Copper futures prices in the U.S. rose on Monday to over $10,700 per ton, the highest level in the last two months, continuing the rise from last week as markets continue to assess the impact of business disruptions and the fragility of the metal supply chain. Freeport-McMoRan, operator of the Indonesian Grasberg mine, recently declared force majeure on contracted shipments following a fatal landslide, with that site accounting for three percent of global copper supply.

The company warned that a full recovery of production is unlikely before 2027 and has reduced its quarterly guidance for copper and gold sales by four percent and six percent, respectively. The incident highlighted the market’s vulnerability to supply shocks, which has been exacerbated by the suspension of operations at Hudbay Minerals’ Constancia mine in Peru amid protests. Prolonged restrictions risk price increases and tightening conditions for smelters.