Commodity weekly: October underscores a year of dramatic sector rotation

Commodity performance in 2026 is being shaped more by sharp sector rotation than by a uniform move in the asset class.

• The Bloomberg Commodity Total Return Index, which tracks 25 energy, metals and agriculture futures, is nearly unchanged in October because energy gains have offset losses in grains and precious metals.
• Energy has outperformed on Middle East tensions, supply disruptions and tight refined-product markets; European natural gas has risen about 38%, although it is not included in the BCOM index.
• Agriculture has diverged: sugar has gained on weather-related supply concerns, while wheat and corn have faced harvest pressure and liquidation of speculative positions; a weaker Brazilian real has also pressured dollar prices for Brazilian exports.
• Precious metals have weakened as bond yields and the opportunity cost of non-yielding assets rose, while growth concerns and AI-investment doubts affected silver and platinum; leveraged positioning amplified the correction.
• Industrial metals have held up relatively well, although copper has faced rising exchange inventories, softer Chinese demand and possible US tariffs, partly offset by electrification and infrastructure demand.
• The annual reversal is pronounced: precious metals, up about 80% in 2025, are down roughly 11% in 2026, while energy, down about 10% last year, is almost 100% higher year to date.

Takeaway: The contrasting drivers of energy, agriculture and metals support broad commodity exposure rather than a narrow allocation, although diversification cannot remove losses if the whole asset class declines.