A slightly weaker dollar index and no change in the long-term bond prices supported many commodities in January. The March dollar index edged 0.07% lower, while the March U.S. 30-year Treasury bond futures were unchanged at 113-24 during the first month of 2025. Precious metals and copper posted across-the-board gains, while crude oil, oil products, and natural gas increased.
Corn, soybean, and wheat futures rallied. Coffee reached new highs, while the prices of cocoa, cotton, and FCOJ fell. Sugar edged marginally higher. Lumber prices edged higher.
Cattle and hog futures posted gains, with live and cattle rising to new all-time peaks.
The S&P 500 moved higher while cryptocurrencies were mixed with gains in Bitcoin and a slight decline in Ethereum.
The most notable price action was in the cattle and coffee markets, which rose to new record highs. Platinum, palladium, and silver futures posted double-digit percentage gains for the month.
The coffee bull continued to percolate
Coffee has taken the bullish baton in the soft commodities sector and the raw materials asset class.
The quarterly ICE Arabica coffee futures chart highlights the soft commodity’s rise to over the $3.80 per pound level, as it made new record highs. While adverse weather conditions in Brazil ignited coffee futures in late 2024, trade issues between the Trump administration in the U.S. and Colombia in early 2025 pushed coffee above the $3.80 level on January 31.
Meats Rally
Cattle and hog futures moved higher, with the active month live and feeder cattle contracts up 4.13% and 4.85%, respectively. While lean hog futures rallied 4.36% in January, the cattle reached new highs.
The continuous quarterly live cattle futures contract dating to the mid-1960s shows the price rising to over $2 per pound for the first time in early 2025.
Feeder cattle futures reached a new record high of nearly $2.80 per pound. I highlighted the bullish, no pun intended, action in cattle in a mid-January Barchart article.
Gains in metals and mixed action in grains
Gold, silver, platinum, palladium, and copper futures on the CME’s COMEX and NYMEX divisions posted gains in January. The slight decline in the U.S. dollar index, steady long bond futures, and U.S. tariffs threats supported the precious and base metals. Gold reached another record high in late January.
Meanwhile, corn, soybean, and wheat futures recovered. The potential for a compromise that ends the Ukraine war could remove some supply fears from the wheat market. However, the January USDA WASDE report showed that soybean and corn balance sheets tightened, leading to price recovery in oilseed and grain futures.
I continue to favor higher lumber prices
Illiquid physical lumber futures rose 1.46% in January after a more than 6% decline in December 2025.
The six-month daily chart illustrates the decline from $638.50 in mid-November 2025 to $560 per 1,000 board feet in late January 2025. Lumber futures dropped as long-term interest and mortgage rates remained stubbornly high. Moreover, winter is the off-season for construction demand. Lower rates in the coming months, tariffs on Canada, and rebuilding demand after the Los Angeles fires could make lumber inexpensive at $560 per 1,000 board feet. Wood prices tend to experience seasonal highs during spring, which could be a buying opportunity in early February at the current price level.
It could be all about trade and tariffs over the coming months
Commodities are global assets. Production occurs locally where the geology supports mining, or the climate is favorable for crop production. Consumption is ubiquitous as people worldwide require raw materials for food, shelter, and to power their lives.
Tariffs, sanctions, and other trade-related issues create barriers that can distort prices, creating shortages in some regions and oversupply in others. Therefore, we should expect volatility in commodity markets in February and beyond. Careful attention to risk-reward dynamics is essential in the current environment, as the tariff issues will remain a clear and present danger to markets. Watch the political landscape, U.S. dollar index, and bond prices for clues about the path of least resistance of raw materials in February.
