Five Key Facts in Commodity Markets: Oil, Copper and Cereals

Trump Wins U.S. Presidency - What Awaits Mexico? Commodity markets are more volatile than ever, driven by a series of global events and political changes. Donald Trump's victory in the U.S. presidential elections, conflicts in the Middle East, the COP29 climate summit, and extreme weather conditions around the world directly affect oil, copper, and cereals, with profound implications for countries like Mexico. Below, five key points are explored to understand the current dynamics of these markets and their potential impact. COP29 and Uncertainty About Environmental Policies This year, COP29 is held in Azerbaijan, bringing together world leaders to discuss energy transition and necessary investments to stop climate change. However, Trump's triumph and his possible exit from the Paris Agreement add critical uncertainty: the United States is the second largest emitter of polluting gases, and its possible withdrawal would affect both global climate policy and the carbon market. If the U.S. stops contributing to funds for developing countries, this could limit investment capacity in clean energy, generating an impact on fossil fuel demand and, therefore, on oil prices. For Mexico and other emerging economies, this could result in a reconfiguration of their own climate and energy policies, as well as a change in commodity trade flows. Copper Demand in China and Its Global Impact Copper Week in Shanghai marks the pulse of the copper market, and this year is no exception. Chinese smelters are expanding their capacity, generating greater competition for raw copper, especially with producers like Freeport McMoRan and Antofagasta. China, the world's largest copper consumer, depends on this metal for its construction, technology, and green energy industries, but trade tensions that could resurge under Trump's administration threaten to slow this demand. The Mexican mining industry, which counts copper as one of its main exports, could be affected if Chinese demand decreases and global prices fall. This would also impact transportation and logistics companies in Mexico, which depend on constant metal movement to maintain their operations. Oil: Oscillations Amid Geopolitical Tensions The oil market has experienced great instability due to the geopolitical context in the Middle East and Trump's energy policy approach. At the beginning of November, Brent crude price reached USD 80.97, reflecting fear that a Middle East conflict would interrupt exports. However, prices fell again due to expectations that Trump would adopt a "Drill, baby, drill" policy that would boost national production and generate a crude surplus. For Mexico, the impact is double: greater U.S. production could reduce oil prices, affecting its oil revenues, but at the same time, this volatility could open opportunities to strengthen its position in the export market. Escalation of Cereal Prices and Dollar Influence This month, cereal prices have continued to rise due to a combination of factors, including bad weather in Europe, export restrictions in Russia, and dollar strength. Rains in France and Germany delayed harvest and winter planting, while corn availability in European ports is limited. Mexico, as one of the main cereal importers, faces high prices and could face greater inflationary pressure on agricultural products. Additionally, the European Union vote on deforestation of crops like soybeans and palm could affect imports and exports of these products, impacting global food supply and demand. Euro Depreciation and Dollar Haven The dollar has gained ground against the euro due to European Union monetary policy and geopolitical tensions that lead investors to seek safe assets. This makes dollar-denominated commodities more expensive, a challenge for importing countries like Mexico. Dollar strengthening could also increase import prices for the food industry and other sectors that depend on foreign commodities, raising costs for companies and consumers. A Perfect Storm in Commodity Markets The combination of political, economic, and climate factors has generated a "perfect storm" in commodity markets. In Mexico, logistics and commodity trade will be impacted, and companies like Control Terrestre must adapt to price volatility, strengthening their operations and adjusting their costs and transportation strategies. The ability to adapt will be essential to navigate an uncertain global market, where each fluctuation in global prices and policies represents a risk, but also an opportunity.