August 2025 Commodities Update

TEETERING TARIFFS

Tariff tumult leads to major market moves

While tariffs have become a persistent feature in economic headlines, their real-world implementation is highly nuanced, creating significant ripple effects across commodity sectors. A new wave of tariffs impacted approximately 90 countries starting August 7, with some rates climbing as high as 50%, intensifying market uncertainty.

China, a cornerstone market for American agricultural products, remains central to the ongoing trade uncertainty. More than halfway through August, the U.S. has yet to record a single soybean sale to China for the current or upcoming marketing year- a stark contrast to the 2023-2024 marketing year when 22% of the U.S. soybean crop was exported to China (China accounted for 54% of U.S. soybean exports). This absence of export sales coupled with trade uncertainty coincided with a highly active day in Agricultural options trading on August 12, which saw the second largest volume of the year at 891,391 contracts and open interest reaching 4,799,682. This surge in trading followed a surprising WASDE report released the same day, which forecast an additional 752 million bushels of corn for 2025 U.S. production.

Global trade uncertainty and tariffs are significantly impacting the metals sector, particularly across gold and copper. The copper market had anticipated broad tariffs in late July; however, the unexpected exemption of raw forms like cathodes and ores triggered the largest single-day selloff in copper's history on July 31, as traders unwound their positions. The gold market also faced a bout of speculative whiplash: the initial announcement of a 39% tariff on Swiss imports was later clarified by the White House, calming initial market volatility.

Uncertainty is also fueling a surge in activity within the energy markets. The average daily volume (ADV) for Crude Oil Weekly options jumped 41% in August compared to July 2025, reflecting a growing demand for short-term hedging instruments. With OPEC meetings scheduled monthly through the end of the year, the potential for continued volatility remains high.

Geopolitical strategy is now a primary driver of volatility across all three major commodity sectors. The resulting price fluctuations are critical, directly influencing production costs, consumer prices and broader inflation expectations.