Commodities

The Trump administration signalled a shift toward protectionism in U.S. trade policy, imposing tariffs on imports from both strategic partners and competitors, which generated renewed uncertainty in international trade relations and the future of existing frameworks such as the African Growth and Opportunity Act (AGOA) and the Generalised System of Preferences (GSP). Earlier analysis has shown that a Free Trade Agreement (FTA) between the Southern African Customs Union (SACU) and the United States can be trade-creating and lead to improved macroeconomic outcomes in SACU countries. However, these positive effects decline over time, with varying impacts across different industries, influenced by initial tariff levels and export orientation relative to the US. This paper examines whether there are economic and strategic incentives for SACU to negotiate a more beneficial agreement than a simple across-the-board elimination of ad valorem import tariffs. Using a dynamic computable general equilibrium (CGE) model, the paper examines the outcomes if cereals, poultry, dairy products, red meat, and sugar products—often classified as sensitive due to their labour intensity, food security implications, and exposure to import competition—were to retain some level of protection under a SACU–US Free Trade Agreement. The results suggest that while the FTA boosts key macroeconomic indicators in the short run, gains taper off over time. Crucially, real wages and employment remain stagnant, and terms of trade deteriorate, raising questions about the inclusivity and sustainability of such a deal. Shielding vulnerable sectors initially enhances SACU’s exports and supports some industry growth, particularly in agriculture. However, without broader reforms and export diversification, long-term competitiveness remains weak. A nuanced FTA design, combined with structural support policies, is essential to unlock lasting and inclusive trade benefits. Full article

Price volatility in the South African fresh produce market poses significant risks to the entire value chain. This study examines the extent of price volatility and spillover effects in these markets to improve price risk management and enhance market stability. Using weekly price data for eight major vegetables (cabbages, carrots, garlic, onions, potatoes, sweet potatoes, spinach, and tomatoes) collected from 19 regional fresh produce markets, volatility patterns were initially assessed with descriptive statistics. Time-varying volatility persistence was modelled using ARCH and GARCH frameworks. The DCC-GARCH framework was used to evaluate spillover effects between markets, and cointegration analysis is employed to determine both short- and long-run interdependencies. The results confirm the existence of spillover effects and patterns of price volatility in the fresh produce markets. We found volatility spillovers between key regional markets. For example, Johannesburg and Tshwane fresh produce markets (large central markets) transmit to several smaller markets, as indicated by significant DCC-GARCH spillover coefficients. Cointegration results show the partial integration of fresh produce markets, suggesting that price movements and volatility are interconnected across regions. This empirical result underscores the importance of understanding price risk management strategies in fresh produce markets and helps value chain decision makers better understand, anticipate, or test the possible effects of price volatility in fresh produce markets at any given time. Policy makers and other stakeholders in the value chain are equipped with knowledge of how best to serve society. Full article

This study looks at the impact of geopolitical risk on the volatility of wheat futures returns over the period 2012–2023, while controlling for inventories, shipping rates, and speculative activity. Using the volatility of CBOT first nearby futures returns, we apply a quantile regression approach to assess the impact of the variables on different parts of the volatility distribution. More specifically, we adopt the Quantile Autoregressive Distributed Lag (QARDL) model, which allows for examining the dynamic short- and long-run effects. We find that geopolitical risk has a non-linear, large positive effect on the top quartile of the distribution of wheat futures returns. We also show that the response of the volatility of wheat futures to shocks in the control variables is mostly non-linear across the conditional quantiles, significant in the tails and not around the median. Full article

The urgent need to mitigate climate change has elevated green hydrogen as a sustainable alternative to fossil fuels, while green cryptocurrencies have emerged to address the environmental concerns of traditional cryptocurrency mining. This study investigates the dynamic correlation between the green hydrogen market and selected green cryptocurrencies (Cardano, Stellar, Hedera, Algorand, and Chia) from July 2021 to April 2024, utilizing the Dynamic Conditional Correlation GARCH (DCC-GARCH) model with robustness checks using EGARCH and GJR-GARCH specifications. Our findings reveal significant correlations, with peaks reaching up to 50% in 2022, a period likely influenced by the Russia-Ukraine conflict. Subsequently, a decline in these correlations was observed in 2023. These results underscore the interconnectedness of sustainability-driven markets, suggesting potential contagion effects during periods of global instability. The high persistence of correlation shocks (α + β values approaching unity) indicates that correlation regimes tend to be long- lasting, with important implications for portfolio diversification and risk management strategies. Robustness checks using EGARCH and GJR-GARCH specifications confirmed qualitatively similar patterns, reinforcing the validity of our findings into the evolving landscape of green finance and energy. Full article

Industrial bio-inputs can improve commodity farming by replacing the use of agrochemicals. To assess the potential of agricultural bio-inputs to contribute to Brazil’s agro-industrial growth, we analyzed the market share held by domestic companies and the local market created by farmers who adopt bio-inputs. The results revealed that Brazilian companies accounted for 82.8% of the 221 companies with agricultural bio-inputs registered in Brazil by 2024. These domestic companies used technologies available to local investors and developed in collaboration with public innovation centers. Adoption levels among interviewed farmers ranged from 41.7% for biosolubilizers to 88.9% for bionematicides, revealing a large domestic market potential for bio-inputs in Brazil. We conclude that industrial agricultural bio-inputs represent an area of opportunity for Brazilian neo-industrialization based on local competitive advantages, low entry barriers, and domestic and foreign investments that can benefit from the local market for bio-inputs. Full article

Technological advances in laboratory-grown diamonds (LGDs) have eroded the scarcity premium of natural diamonds, raising the question of whether diamonds still function as a safe haven. At the same time, crystalline osmium has become investable for the first time, as crystallization technology enables safe storage, certification, and global trading. Using monthly data from 2017–2025, we form diversified portfolios with and without diamonds and with and without osmium, as well as two-asset combinations with the MSCI World. The results show that diamonds no longer provide reliable stability, while osmium consistently contributes to reducing volatility. For portfolio investors, the key lesson is that traditional safe-haven roles can change; diamonds no longer offer robust protection, whereas crystalline osmium acts as a stabilizing component. These findings illustrate the contrasting effects of technological change: substitution and loss of value for diamonds, usability and stabilization for osmium. Full article

We analyze extreme gold price movements between 1975 and 2025 using Extreme Value Theory (EVT). Using both the Block-Maxima and Peaks-over-Threshold approaches on a daily return basis, we estimate Value-at-Risk (VaR) and Expected Shortfall (ES) for the entire distribution focusing on a long-term view. Our results demonstrate that models based on the standard normal distribution systematically underestimate extreme risks, whereas EVT provides more reliable measures. In particular, EVT captures not only rare losses, but also sudden positive rallies, highlighting gold’s dual function as a risk and opportunity asset. Asymmetries emerge in the analysis: at the 0.99 quantile, losses appear larger in absolute value than gains. At the 0.995 quantile, in some episodes, upside extremes dominate. Furthermore, we find that geopolitical and economic shocks, including the oil crises, the 2008 financial crisis, and the COVD-19 pandemic, leave distinct signatures in the extremes. By covering five decades, our study provides the most extensive EVT-based assessment of gold risks to date. Our findings contribute to debates on financial stability and provide practical guidance for investors seeking to manage tail risks while recognizing gold’s potential as both a safe haven and a speculative asset. Full article

The global push for electrification and decarbonization has sharply increased demand for critical raw materials—especially lithium and copper—heightening financial and strategic pressures on firms that lead these supply chains. Yet, the systemic financial risks arising from inter-firm interdependencies in this sector remain largely unexplored. This article presents a novel distance-based network framework to analyze systemic risk among the world’s top 15 lithium and copper producers (2020–2024). Firms are represented through standardized vectors of profitability and risk indicators (liquidity–solvency), from which we construct a two-layer similarity network using Euclidean distances. Graph-theoretic tools—including Minimum Spanning Tree, eigenvector centrality, modularity detection, and contagion simulations—reveal the structural properties and transmission pathways of financial shocks. The results show a robust-yet-fragile topology: while stable under minor perturbations, the network is highly vulnerable to failures of central firms. These findings highlight the utility of distance-based network models in uncovering hidden fragilities in critical commodity sectors, offering actionable insights for macroprudential regulators, investors, and corporate risk managers amid growing geopolitical and financial entanglement. Full article

Cryptocurrencies such as Bitcoin can be classified as commodities under the Commodity Exchange Act (CEA), giving the Commodity Futures Trading Commission (CFTC) jurisdiction over those cryptocurrencies deemed commodities, particularly in the context of futures trading. This paper presents a method for predicting both long- and short-term trends in selected cryptocurrencies based on the Fractal Market Hypothesis (FMH). The FMH applies the self-affine properties of fractal stochastic fields to model financial time series. After introducing the underlying theory and mathematical framework, a fundamental analysis of Bitcoin and Ethereum exchange rates against the U.S. dollar is conducted. The analysis focuses on changes in the polarity of the ‘Beta-to-Volatility’ and ‘Lyapunov-to-Volatility’ ratios as indicators of impending shifts in Bitcoin/Ethereum price trends. These signals are used to recommend long, short, or hold trading positions, with corresponding algorithms (implemented in Matlab R2023b) developed and back-tested. An optimisation of these algorithms identifies ideal parameter ranges that maximise both accuracy and profitability, thereby ensuring high confidence in the predictions. The resulting trading strategy provides actionable guidance for cryptocurrency investment and quantifies the likelihood of bull or bear market dominance. Under stable market conditions, machine learning (using the ‘TuringBot’ platform) is shown to produce reliable short-horizon estimates of future price movements and fluctuations. This reduces trading delays caused by data filtering and increases returns by identifying optimal positions within rapid ‘micro-trends’ that would otherwise remain undetected—yielding gains of up to approximately 10%. Empirical results confirm that Bitcoin and Ethereum exchanges behave as self-affine (fractal) stochastic fields with Lévy distributions, exhibiting a Hurst exponent of roughly 0.32, a fractal dimension of about 1.68, and a Lévy index near 1.22. These findings demonstrate that the Fractal Market Hypothesis and its associated indices provide a robust market model capable of generating investment returns that consistently outperform standard Buy-and-Hold strategies. Full article

The objective of this research is to understand the relationship between the tone of information released in government harvest reports, in extreme market conditions (rising and falling), and the behavior of agricultural commodity prices. In the period between January/2017 and February/2023, an autoregressive model of moving averages was used with a generalized autoregressive conditional heteroscedasticity approach. The evidence allows us to infer that investors can, on some occasions, use this information to direct their portfolios in order to balance risk and return. However, the full impact of the tone is not reflected immediately, possibly requiring time to be absorbed. Depending on the informational weight, the commodity, and the market context, there may or may not be an impact. This divergent empirical evidence indicates that there is a complex relationship between tone reading and asset pricing. Full article

We study Portugal’s household electricity retail market after legal liberalisation, quantifying market concentration (Herfindahl–Hirschman Index (HHI) and the four-firm concentration ratio (CR4)), consumer switching, and asymmetric wholesale-to-retail price pass-through. Using monthly data for January 2014–December 2019 (primary sample) and robustness checks for 2008–2022, we compute concentration indices from ERSE supplier shares, analyse switching dynamics, and estimate nonlinear autoregressive distributed lag (NARDL) models that decompose wholesale price changes into positive and negative components. The retail market remains highly concentrated during the primary window (HHI ≈ 6300–6800 using shares expressed as percentages on a 10,000 scale); switching rose after deregulation but stabilised at moderate monthly rates; and long-run pass-through is estimated at β⁺ ≈ 0.55–0.61 for wholesale increases and β⁻ ≈ 0.49 for decreases (Wald tests reject symmetry at conventional levels). Results are robust to alternative concentration metrics, exclusion of 2022, and varied lag orders. Policy implications emphasise tariff simplification, active consumer-activation measures, and regular monitoring of concentration and pass-through metrics. Full article

This study investigates the impact of the COVID-19 pandemic on the Tokyo mango market by combining transaction data from the Ota Fruit Market with Google Mobility indices. In Japan, mangoes are regarded as a luxury fruit, largely dependent on imports and associated with high domestic production costs, which positions them as premium commodities. To assess the influence of price dynamics and human mobility on mango trading volumes during the pandemic, this study employs an autoregressive distributed lag (ARDL) model. The long-run results indicate that mango demand was positively associated with increased residential activity: a 1% rise in time spent at home during the COVID era corresponded to an increase of 786 kg in trade volume. Similarly, a 1% increase in time spent in retail and recreation areas was associated with a 364 kg rise in trade volume. In contrast, time spent in grocery and pharmacy locations showed no statistically significant effect. In the short run, fluctuations in mobility patterns and price levels contributed to variations in demand, with sales volumes adjusting toward their long-run equilibrium. The mobility indices exhibited mixed short-term effects on trade volumes. Notably, the analysis revealed that mango trading volumes rebounded in 2022, coinciding with the easing of pandemic-related disruptions. Full article

As global economies accelerate their energy transitions, the photovoltaic sector faces critical challenges linked to material supply, security, and sustainability. Solar-grade silicon, enabling over 90 percent of photovoltaic technologies, has become a strategic commodity underpinning the expansion of renewable energy infrastructures. This short communication examines the evolving role of solar-grade silicon within the global energy transition, moving beyond its traditional classification as a technical material to frame it as a commodity of geopolitical and economic significance. We analyze recent price trends, regional production asymmetries, and trade dependencies, identifying key vulnerabilities in current supply chains. Although alternative photovoltaic materials such as perovskites and organics attract research interest, their commercial immaturity reinforces the centrality of silicon. The novelty of this contribution lies in treating solar-grade silicon through a commodity lens, integrating techno-economic metrics with policy and investment considerations. We highlight opportunities for reinforcing supply resilience through domestic production, circular economy strategies such as silicon recovery and reuse, and diversification of technological pathways. Our findings advocate for the inclusion of solar-grade silicon in strategic resource planning and industrial policy frameworks. Recognizing its unique position at the intersection of energy, technology, and trade is essential to achieving secure, scalable, and sustainable photovoltaic deployment worldwide. Full article

Artisanal fishing is a central pillar of the Angolan economy, particularly in the southern province of Namibe, where it serves as the primary economic activity for numerous coastal communities. However, these communities face significant challenges, including competition from expanding industrial fisheries and inadequate infrastructure at fishing centers, which hampers the storage, preservation, and transportation of catches. These limitations contribute to post-harvest losses and the reduced market value of products, despite the region’s rich diversity of pelagic and demersal resources. This study evaluated the economic viability of artisanal fishing in Namibe under three production scenarios, varying in catch levels and the inclusion of fish processing activities such as dried fish and fishmeal production. Scenario A (pessimistic) assumed a 10% reduction in production compared to the best estimates; Scenario B (intermediate) was based on average reported catches; and Scenario C (optimistic) considered a 10% increase in catches, accounting for seasonal and environmental variability. Results indicated that artisanal fishing was economically viable under all scenarios, with the Internal Rate of Return (IRR) consistently exceeding the Minimum Attractive Rate of Return (MARR) of 7.5%. IRR values ranged from 34.30% (Scenario A, without by-product commercialization) to 106.28% (Scenario C, with dried fish and fishmeal production and sales), representing a more than threefold increase in profitability. This substantial gain underscores the transformative potential of processing by-products into higher-value commodities, enabling integration into larger-scale and more liquid markets. Such value addition supports the concept of a proximity economy by promoting short production cycles, reducing intermediaries, and strengthening local value chains. Beyond financial returns, the findings suggest broader socioeconomic benefits, including local economic growth, job creation, and the preservation of traditional production knowledge. The payback period was less than four years in all cases, decreasing to 1.94 years in the most favorable scenario. By-products such as dried fish and fishmeal exhibit commodity-like characteristics due to their higher commercial value, increasing demand, and potential integration into regional and animal feed markets. In conclusion, diversifying marketing strategies and maximizing the use of fish resources can significantly enhance the economic sustainability of artisanal fishing, foster socioeconomic inclusion, and support the development of artisanal fishing communities in Namibe. Full article

Gum arabic production is a key source of income for communities in several African countries. Despite this, producing nations capture only a small share of the market value due to weak domestic markets, low price incentives, and limited value-added. Meanwhile, global demand is expected to grow from USD 1.1 billion in 2025 to USD 2.2 billion by 2035, driven by rising consumption in food, pharmaceuticals, cosmetics, and textiles. Importing countries, such as France and the US, benefit from significantly higher export prices—French export prices rose from USD 1.58/kg to USD 4.63/kg—highlighting the value added from outside producer regions. This study uses a qualitative analytical approach to examine trends and challenges in enhancing value capture within producer countries. Key strategies include local value-added, collective action, compliance with international standards, market transparency, and direct trade linkages. Findings suggest that implementing these measures could raise farmgate prices by 30–50%, retain more value within African economies, and improve access to premium export markets. In conclusion, targeted interventions are crucial for strengthening the gum arabic supply chain and promoting sustainable and equitable collection practices in producer countries. Full article

Futures and forward contracts together offer farmers of all sizes important tools for shifting and managing production risk. This risk shifting is particularly apparent in the U.S. grain complex, where the United States also has a significant export position. Because of this international reach, we argue that the futures and forward markets play a critical role in reducing world food insecurity and thus contribute to satisfying Sustainable Development Goal #2: Zero Hunger. We further argue that the presence of investors willing to take the opposite side of the farmers’ natural short hedge helps futures markets perform their key functions of price discovery and risk management. In addition to these roles, futures markets also enable farmers to finance their crops more efficiently over the production cycle, supporting operational stability. Finally, we highlight that agricultural markets in the United States are supported by significant regulation at the county, state, and federal levels. These farming regulations, coupled with federal oversight of agricultural futures markets, provide sufficient confidence that the goal of Zero Hunger is being pursued in an appropriate and effective manner, reinforcing the case for agricultural futures as a meaningful component of a broader sustainable investment strategy. Full article

The enforcement of the European Union Deforestation Regulation (EUDR) may reduce the supply of natural rubber to the European Union (EU), potentially leading to price increases due to the inelastic nature of rubber demand. This study assesses the potential financial implications for smallholder producers in Ghana, considering both the opportunities and risks associated with the evolving regulatory environment under EUDR and local market access conditions. A cost–benefit analysis (CBA) was conducted to evaluate the impact of different EUDR-related export decline scenarios on the net present value (NPV) of a standard 4-hectare plantation. The results suggest that even a minor 2.5% decline in global exports to the EU could increase the NPV by 17% for an independent compliant producer. However, a simulated COVID-19-like crisis in the fifth year of production leads to a 20% decline in NPV, reflecting vulnerability to external shocks. Based on these findings, the study identifies two priorities. This first is improving the coordination and harmonization of compliance efforts across the value chain to enable more producers to benefit from potential EUDR-related price increases. The recent creation of the Association of Natural Rubber Actors of Ghana (ANRAG) presents an opportunity to support such collective mechanisms. Second, minimizing losses during demand shocks requires the Tree Crops Development Authority (TCDA) to establish clear rules and transparent reporting for authorizing unprocessed rubber exports when factories reduce purchases due to low international prices—thus preserving market access for vulnerable producers. Together, these approaches would ensure that the potential benefits of the EUDR are realized inclusively, remain stable despite market downturns, and do not undermine value addition in domestic processing factories. Full article

The phenomenon of rising forward price volatility, both historical and implied, as maturity approaches is referred to as the Samuelson effect or maturity effect. Disregarding this effect leads to significant mispricing of early-exercise options, extendible options, or other path-dependent options. The primary objective of the research is to identify a practical way to incorporate the Samuelson effect into the evaluation of commodity derivatives. We choose to model the instantaneous variance employing the exponential decay parameterizations of the Samuelson effect. We develop efficient calibration techniques utilizing historical futures data and conduct an analysis of statistical errors to provide a benchmark for model performance. The study employs 15 years of data for WTI, Brent, and NG, producing excellent results, with the fitting error consistently inside the statistical error, except for the 2020 crisis period. We assess the stability of the fitted parameters via cross-validation techniques and examine the model’s out-of-sample efficacy. The approach is generalized to encompass seasonal commodities, such as natural gas and electricity. We illustrate the application of the calibrated model of instantaneous variance for the evaluation of commodity derivatives, including swaptions, as well as in the evaluation of power purchase agreements (PPAs). We demonstrate a compelling application of the Samuelson effect to a widely utilized auto-callable equity derivative known as the snowball. Full article

The COVID-19 pandemic had significant global impacts. In Japan, consumers refrained from going out, and dining out decreased significantly, which strongly affected the restaurant industry and resulted in a shift in food demand from eating out to home consumption. The seafood industry is no exception to this trend. This study surveyed 300 individuals with experience in seafood transactions across wholesalers, restaurants, and retailers to examine how the pandemic influenced supply and demand patterns from a distribution perspective. Results indicated that while the volume of luxury seafood handled by restaurants and wholesalers decreased, the volume handled by retailers increased. Conversely, the volume of inexpensive popular seafood declined across all three sectors. The findings suggest that some of the luxury seafood previously sold to restaurants was redirected to retailers as consumer demand shifted from dining out to home consumption during the pandemic. Full article