Global demand for U.S. liquefied natural gas (LNG) remains strong, especially in Europe, as nations pivot away from Russian energy. Trump’s past stance of leveraging U.S. energy exports as a geopolitical tool may heighten competition in international markets. However, the pace of LNG export growth will hinge on the construction of pipelines and terminals, which require significant investment and time.

Geopolitical risks, including trade disputes with Canada or unrest in the Middle East, add another layer of complexity. Additionally, a strong dollar, favored by Trump in the past, could reduce the competitiveness of U.S. exports, further influencing oil and gas prices.

Agriculture: Shifting Policies and Trade Dynamics 

The agriculture sector is likely to undergo notable shifts under Trump’s leadership, with efforts aimed at bolstering domestic production. Expanded subsidies and crop insurance programs may encourage higher planting levels for key crops such as corn, soybeans, and wheat. The recent appointment of Joel Salatin as an advisor to the USDA signals a potential focus on revitalizing cattle herds, a move that could stabilize beef prices over time.

Trade policies, a hallmark of Trump’s tenure, remain a double-edged sword for agriculture. Bilateral agreements might open doors to new export markets, but tensions with major partners like China and Canada could introduce volatility. Tariffs on Canadian imports could drive domestic prices higher, while disputes with China may impact key exports, including soybeans and grains.

On the brighter side, rising demand for U.S. beef and pork in Asian markets may offset these challenges, provided domestic producers can meet global needs. Maintaining this balance will be critical, especially as producers grapple with fluctuating input costs and ongoing supply chain pressures.

Metals: Infrastructure and Strategic Resources

Trump’s ambitious infrastructure agenda is poised to drive demand for
industrial metals, including steel, copper, and aluminum. These materials are essential for projects like roadways, bridges, and energy infrastructure upgrades. Coupled with lower corporate taxes and deregulation, the administration’s policies may boost industrial activity, further fueling consumption.

Meanwhile, the transition to cleaner energy technologies continues to shape markets for metals like lithium, nickel, and cobalt, driven by the growing adoption of electric vehicles (EVs). While federal policy may not prioritize renewables, state-level initiatives and market forces are likely to sustain this momentum.

Trade tensions with China, a dominant supplier of rare earth elements and battery components, remain a key risk. Supply chain disruptions or tariffs on critical imports could push costs higher for U.S. manufacturers, creating ripple effects across industries dependent on these materials.

Soft Commodities: Weather and Market Forces

Soft commodities face an uncertain year as weather conditions and shifting demand patterns take center stage. Last year’s poor growing conditions in Africa and South America drove record-high prices for cocoa and coffee. Whether this trend continues depends largely on upcoming harvests, but the early outlook remains mixed.

The weak 2024–25 coffee crop presented unique challenges, including
drought and pest issues, leading some analysts to question if these
disruptions signal a broader trend. The only way to determine the extent of recovery will be to monitor the flowering and cherry development stages in the months ahead.

Sugar markets, heavily influenced by Brazil’s ethanol production, also merit attention. A decline in global oil prices could reduce demand for ethanol, diverting more sugarcane into traditional sugar production and potentially depressing prices. However, any significant policy shifts or changes in consumer behavior could alter this balance, adding to market uncertainty.

Geopolitical Considerations and Trade Wars

Geopolitical developments are set to play a critical role in shaping commodity markets this year. Efforts to broker peace in Ukraine could stabilize European natural gas supplies, reducing reliance on U.S. liquefied natural gas (LNG). Such a shift might cool demand for American energy exports, reshaping the global market landscape.

Trump’s confrontational stance toward China and the continued push by BRICS nations to diminish the dollar’s dominance add another layer of complexity. These efforts could disrupt established trade flows and create new opportunities or risks for U.S. exporters.

Trade disputes remain a wildcard. While they could temporarily disrupt commodity supplies, they may also pave the way for renegotiated agreements that open up new markets. For instance, bilateral trade deals with emerging economies might drive demand for U.S. agricultural products like grains and meat, while tariffs on foreign imports could bolster domestic production in select industries.

Conclusion

The return of the Trump administration ushers in a period of significant change and opportunity for commodity markets. Energy, agriculture, metals, and soft commodities will all feel the effects of new policies, trade dynamics, and environmental factors. Meanwhile, the dollar’s movements will continue to influence pricing and competitiveness in global markets.

While uncertainties persist, 2025 promises to be a year filled with both challenges and opportunities. Staying informed and adaptable will be key for traders navigating this rapidly shifting landscape.

This newsletter reflects the opinions of its author(s) and is not intended as investment advice or solicitation. Trading commodities involves substantial risk and is not suitable for all investors. Past performance is not indicative of future results