Cocoa, Bitcoin, and Ethereum posted over 35% gains in November, with Arabica coffee futures moving nearly 30% higher to the highest price since 1977. Former President Donald Trump became the President-elect with a victory in the Electoral College, the popular vote, and with majorities in the Senate and the House of Representatives. Stocks rallied, the VIX declined, and U.S. government bonds were higher. The dollar index took off on the upside, reaching the highest level since late 2022 before correcting. The volatile and higher U.S. dollar weighed on metals prices, with precious and base metals posting across-the-board losses. However, gold and silver remain in bullish long-term trends despite the November declines. Thinly traded palladium was the worst-performing commodity and the only one with an over 10% monthly decline.
Natural gas moved higher as seasonal buying lifted the energy commodity. Crude oil, oil products, ethanol, and Rotterdam coal prices moved lower. Corn was higher, while soybeans and wheat prices declined. Sugar was lower, while FCOJ and cotton rose with the explosive gains in coffee and cocoa futures. The cattle and hog futures posted gains. November’s price action in commodities was as follows:
Bitcoin stopped just short of the $100,000 level before correcting.
Soft commodities continue to lead the commodities asset class
Cocoa posted the most significant gain, moving 36.79% higher in November.
The monthly cocoa chart for March 2025 delivery highlights the rally from $6,890 at the end of October to $9,425 per ton at the end of November.
Meanwhile, coffee futures roared 29.55% higher in November.
The monthly Arabica coffee futures chart for March delivery shows a rise from $2.4550 to $3.1805 per pound.
The quarterly continuous contract coffee futures chart highlights the fourth rise to over $3 per pound, coffee’s rally to $3.3545 per pound in November, and the increase to the highest level since 1977 when coffee futures reached the record $3.3750 per pound high. If coffee is going to follow cocoa’s 2024 price action, we could see the coffee beans blow through the 1977 all-time peak as a hot knife goes through butter.
Coffee is rallying as adverse weather conditions in Brazil, the leading producer and exporter of Arabica beans, have caused rising supply concerns. Moreover, poor growing conditions in Colombia and Honduras have turbocharged the recent rally.
Bitcoin and cryptos were bullish beasts
President-elect Donald Trump has expressed support for Bitcoin and cryptocurrencies. Bitcoin exploded higher after the November 5 U.S. election.
The monthly chart illustrates Bitcoin’s rise to a $99,631.31 peak in late November before settling the month at over the $97,000 per token level. While Bitcoin gained 38.11% during November, Ethereum, the second-leading cryptocurrency, was 40.83% higher for the month.
Energy could come under pressure
Crude oil prices were down around 1% in November, with the WTI futures for January delivery falling 1.18% and Brent Futures for February delivery moving 0.86% lower.
The weekly continuous NYMEX crude oil futures chart highlights the bearish trend of lower highs since the 2022 $130.50 peak. The NYMEX futures settled at $68 per barrel on November 29, not far above the critical technical support at the May 2023 $63.57 low.
OPEC+ will meet to discuss output policy on December 5, but the incoming administration has pledged to ramp up U.S. petroleum production to achieve energy independence, lower prices, increase exports, and reduce inflation and the U.S. debt by becoming the world’s leading crude oil supplier. A significant increase in U.S. crude oil production could send prices substantially lower in 2025. The price trend remains bearish, and the Trump administration’s pledge of “promises made, promises kept” could mean a return to sub-$50 per barrel crude oil prices.
Natural gas is a seasonal commodity
While crude oil, oil products, crack spreads, Rotterdam coal, and ethanol prices moved lower, natural gas bucked the trend with a 13.31% November rally.
The daily NYMEX U.S. natural gas futures chart for January delivery shows a rise from $2.968 at the end of October to $3.363 per MMBtu at the end of November. Natural gas is moving into the peak heating season, during which inventories tend to decline, and prices often peak.
The chart shows that natural gas inventories across the United States were at 3.967 trillion cubic feet for the week ending on November 22. Stocks were 3.5% higher than last year in late November and 7.2% above the five-year average. Stockpiles rose to a 3.972 tcf high, the highest level in years. While natural gas futures posted a double-digit percentage gain in November, ample inventories to meet the winter demand could temper any significant rallies. However, the weather and temperatures in the U.S. will determine the price path over the winter months. Moreover, temperatures in Europe and Asia could impact prices as the U.S. exports LNG to regions where prices are substantially higher.
Geopolitical factors prevail as the administration changes
President Trump will take the oath of office on January 20. The incoming administration will dramatically shift U.S. domestic and foreign policies. However, the war in Ukraine continues to escalate, with Russia threatening to respond to U.S. and European support for Ukraine with a more aggressive, and perhaps nuclear, response. While a ceasefire between Israel and Lebanon has occurred, Iran, Iran-backed satellites, and the hostages in Gaza remain clear and present dangers to the region.
China’s relations with the U.S. have deteriorated, and tariff threats could worsen the situation. U.S. tariffs and sanctions against other countries could create barriers to trade and price dislocations. However, time will tell if the incoming administration’s threats of tariffs are a bluff and negotiating tactics.
Commodities are global assets that feed, shelter, and power the world. The U.S. dollar remains the world’s reserve currency, so the dollar’s path against other currencies and U.S. interest rates will be influential factors for raw material prices in December and 2015. Expect lots of volatility in the commodities asset class, and you will not be disappointed.
