Silver and gold surge on geopolitical tensions while wheat prices tumble
Global commodity markets showed mixed movements on Tuesday, with metals surging while grains remained subdued. Gold and silver prices climbed overnight, driven by geopolitical tensions and shifting investor sentiment. Meanwhile, wheat and corn markets faced downward pressure as oversupply concerns weighed on prices.
In precious metals, gold’s Cash Index (GCY00) rose by as much as $26.39 (0.5%) overnight, while silver’s Cash Index (SIY00) jumped $2.73 (3.6%). The rally in silver was partly linked to rising fears that China could adopt a more aggressive stance toward Taiwan, mirroring Russia’s actions in Ukraine and the US approach to Venezuela. These tensions overshadowed other geopolitical noise, including the US president’s remarks about Greenland and Venezuela, which markets largely dismissed.
Grain markets, however, presented a quieter picture. Wheat prices fell sharply to around 180 euros per tonne, pushing German farmers into losses on every tonne sold. The drop came amid expectations of a record global wheat harvest of 808 million tonnes for 2025/26, with the EU projected to produce 134 million tonnes and Germany 22.5 million tonnes. Declining winter wheat acreage added to the downward pressure. All three National Cash Wheat Indexes—($CSWI), ($CRWI), and ($CRSI)—traded below their five- and ten-year December lows, reflecting weak demand.
The corn market saw little movement before dawn, with the National Corn Index ($CNCI) hovering near $4.0775, leaving the national average basis at 36.75 cents under March futures. Soybeans, however, edged slightly higher, with the March contract (ZSH26) closing 16.25 cents up and the May contract gaining 0.5 cent. Analysts noted that China may be securing secondary soybean supplies while awaiting Brazil’s next harvest to replenish stocks.
In broader markets, Asian equities closed higher, European shares mostly advanced, and US stock index futures traded slightly lower. On the futures front, noncommercial traders reduced their net-short positions in all three wheat markets as of December 30. US wheat exports for the 2024-25 marketing year are forecast to rise 26%, reaching 979 million bushels—up from 776 million bushels the previous year.
The day’s trading highlighted a divide between metals and grains, with silver and gold gaining on geopolitical risks while wheat struggled under heavy supply forecasts. US wheat exports are set to increase, but weak demand and record harvests continue to pressure prices. Markets will likely keep watching China’s soybean purchases and broader geopolitical developments in the coming weeks.
