Commodities: A Proactive Approach Pays Off

The New York Cotton Exchange is considered the birthplace of the “open outcry”. Beginning in 1870, brokers there traded futures contracts and options on cotton, frozen orange juice concentrate, and potatoes by open outcry. In its original form, this trading floor no longer exists today, nor does the deafening procedure in a hall filled with traders. If “open outcry” were still practiced, 2026 would have been a particularly loud and, above all, hectic year. This is especially true for the energy sector. “The first six months of the year were a real challenge for the oil markets,” reports Renato Mettler, portfolio manager on the commodities team at Vontobel Multi Asset Boutique. When the war in Iran broke out in late February, the price of a barrel of North Sea Brent crude rose by as much as nearly three-quarters in less than two weeks. In early May, the futures contract reached a four-year high of 126.41 US-Dollars, only to fall back to pre-war levels by mid-year. “What turned out to be the most severe supply disruption in the oil market in modern history ultimately proved to be manageable for a certain period of time,” explains Mettler.

He attributes remarkable resilience to the commodities markets as a whole, given the ups and downs in energy prices. This is all the more true given that the U.S. dollar has shown unexpected strength. For US-Dollar-denominated assets such as commodities, this traditionally represents a headwind. Nevertheless, the broad-market Bloomberg Commodity Total Return Index (BCOM) was trading more than a fifth above its 2025 closing price at the end of July. Renato Mettler attributes this strength primarily to the tight balance between supply and demand. “Looking ahead, inventories, production trends, the weather, and end-user demand are likely to come to the fore,” he predicts. Tight supplies and supply chains that have become less flexible are making many commodity markets vulnerable to even minor disruptions. “Fundamentals are back in the spotlight and are likely to be the key driver of commodity performance in the coming months,” Mettler summarizes his assessment.

Carsten Stork shares this view. A seasoned trader and investment newsletter author, he knows the commodities markets inside and out. Thirty years ago, he completed his training as a futures trader. Today, Stork contributes his expertise to the PP RM Dynamic Commodity Index (DCX). Together with his colleagues at Renditemanufaktur, he is responsible for managing this benchmark on behalf of index sponsor PP-Asset-Management. His team identifies promising investment opportunities in the commodities market through fundamental and technical analysis. Another difference from conventional indices is that the DCX can also bet on falling
prices, that is, it can establish short positions. The strategy is implemented using structured products from Vontobel, which include both long and short variants. The issuer’s continuous market-making ensures a sufficiently high level of liquidity. The weight of any single position in the DCX is capped at 15 percent. In addition to commodities, the index can capitalize on macroeconomic themes and hold a cash allocation of up to 50 percent of the total portfolio.

So far, the strategy has paid off. In December 2024, Vontobel issued strategic certificates linked to the DCX. Today, these products are trading at about 60 percent above their initial value. By comparison, the BCOM has posted a 45 percent gain over this period. Of course, past performance is neither an indication nor a guarantee of future gains. Furthermore, the strategy is subject to risks, particularly due to the use of leveraged products.

Nevertheless, Carsten Stork is more convinced than ever of the concept. “Since the launch, many developments in the markets have unfolded just as we expected,” he explains. The active approach made it possible to react quickly to changes in the market environment. This allowed the investment team to swiftly mitigate the correction in the oil market during the second quarter of 2026. When selecting positions, the investment team combines several factors. The “storyline” component plays a central role. Here, the experts identify significant market events and global trends that could influence commodity prices.

An exceptionally strong El Niño is currently developing in the Pacific. This natural climate phenomenon, which is accompanied by higher surface water temperatures, can affect precipitation worldwide. “This could have a massive impact on grains and soft commodities,” concludes Carsten Stork. This applies just as much to coffee and sugar cultivation in South America and Asia as it does to cocoa harvests in West Africa. Consequently, the DCX is positioned on the long side for these and other agricultural commodities. The strategy is also betting on rising prices in the precious metals segment. As of the end of July, a gold-based long mini-future contract constituted the largest single position. “Following the correction of recent months, the precious metal is in an interesting consolidation zone,” explains Stork. He also believes that monetary policy expectations may shift. Currently, the markets expect the Federal Reserve to raise interest rates after the summer break. Stork points to the Fed’s dual mandate. In addition to rising inflation, U.S. monetary policymakers must keep an eye on the labor market. Recently, job growth has stalled. In this regard, the expert believes the central bank may eventually ease its monetary policy, which would be positive for interest-free gold. Stork cites another argument in favor of the yellow metal: “Central banks are buying more gold than ever before”. Even in recent years, its increased use as a currency reserve has been a key driver of the gold rally.