Precious metals ignored the debt and currency markets, posting across-the-board gains. Gold reached a new record high, and palladium led the way on the upside with a more than 11% gain. While gold, silver, platinum, and palladium posted gains, copper prices moved lower.
Grain markets continued to decline, while soft commodities were mostly lower, correcting from the bullish price action over the first nine months of 2024 and throughout 2023. Meats moved mostly higher, led by lean hog futures, despite the offseason for demand. Energy commodities were mixed, with gains in crude oil and oil products and losses in natural gas.
As we head into the winter holiday season, many commodities remain in long-term bullish trends that have made higher lows and higher highs since the 2020 pandemic-inspired bottoms. October’s price action in commodities was as follows:
Stocks and bonds were lower. Bitcoin outperformed Ethereum during the month that ended on October 31, 2024.
Metals Continue to Rally- New highs in gold
Palladium posted the most impressive gains in the precious metals sector, moving 11.14% higher. Silver moved 4.25% higher, and platinum was up over 2%. Gold moved 3.38% higher and traded to a new record peak.
The long-term COMEX gold futures chart highlights the move to the $2,801.80 per ounce peak, with December gold trading at near the $2,750 level on October 31. Rising interest rates and a stronger dollar did not impede gold’s ascent.
Meanwhile, copper declined in September as the nonferrous metals are highly sensitive to interest rates and currency values. COMEX copper futures fell 4.68% for the month. Meanwhile, interest rate-sensitive lumber prices posted a nearly 8% gain despite the rise in long-term rates.
Energy prices were mixed
Energy futures faced bullish and bearish factors in October. Crude oil, oil products, crack spreads, and ethanol swaps moved higher, while natural gas, and Rotterdam coal prices declined.
Crude oil prices rallied during the quarter on geopolitical concerns, but prices moved lower after Israel did not attack Iranian petroleum infrastructure, concentrating on only military targets. Natural gas led the sector on the downside with a 19.07% decline.
The three-month chart illustrates the downward price momentum in nearby NYMEX December natural gas futures, which took prices below the $3 per MMBtu on the December contract despite bullish seasonality.
The price action in natural gas reflects high inventory levels that are 2.8% above last year’s level and 4.8% over the five-year average. The price action in traditional energy commodities reflects seasonality and uncertainty surrounding the November 5 U.S. election and the future of U.S. energy policy.
Soft commodities are mostly lower- FCOJ and sugar buck the bearish price action
Coffee futures led the softs on the downside with an over 9% decline. Cocoa was down over 5%, while cotton fell around 5.50%. World sugar futures moved 1.20% higher, while FCOJ futures posted a 7.41% gain, leading the soft commodities sector.
The long-term chart highlights the move to a record high over the $5 per pound level in October. Brazil is the leading orange producer and exporter, and adverse weather conditions have weighed on supplies, lifting prices to over double the pre-2023 high.
The short-term chart illustrates the explosive move to nearly $5.30 per pound on the November ICE FCOJ futures contract.
Grains fall, and animal proteins post gains, with hogs leading on the upside
The leading grain futures, including soybeans, corn, and wheat, declined in October as the markets moved into the offseason after the harvest. Soybeans led the way lower with an over 7% decline, while corn and CBOT wheat futures fell 3.30% and 2.31%, respectively. The most recent October WASDE report showed plenty of grains and oilseeds that meet the global demand.
Animal proteins tend to reach seasonal lows after the annual grilling season, which runs from late May through early September. In a sign of strength, live and feeder cattle futures and lean hog futures were mostly higher despite the offseason for demand. The December live cattle edged 0.81% higher, while November feeder cattle futures declined 1.46%. December lean hogs exploded higher.
The three-month lean hog futures chart illustrates the impressive 14.36% gain as pork prices have worked to catch up with the recent gains in beef in October.
We may not have to wait long for volatility
The November 5 U.S. election could cause lots of price variance in markets across all asset classes. A clear winner will provide some certainty, while a very close result that takes days, weeks, or longer to determine a winner could cause markets to become volatile rollercoasters. The election will determine the path of U.S. policy, which will significantly impact raw material prices, stocks, bonds, and all markets.
Meanwhile, with wars raging in Ukraine and the Middle East, the geopolitical landscape has the potential to cause sudden market volatility in the blink of an eye. With two months before the end of 2024, expect high price variance in all markets. Volatility creates a paradise of opportunities for flexible and disciplined traders but can be a nightmare for passive investors. Fasten those seatbelts in the current environment.
On the date of publication, Andrew Hecht did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
