Commodities’ Powerful Start Amid Global Shifts
April 08, 2025
Read Time 4 MIN
Market Overview: a Strong Start for Commodities
Commodity markets posted strong gains in the first quarter of 2025, supported by a declining U.S. dollar, persistent geopolitical tensions, and shifting trade policies. The Trump Administration’s emphasis on reciprocal tariffs has introduced new uncertainty to global trade, prompting some market participants to stockpile commodities in anticipation of future supply disruptions.
All major commodity sectors advanced during the quarter, with precious metals as the top performer. Industrial metals and energy also saw meaningful gains, benefiting from both supply concerns and policy-driven demand.
Index Performance: Benchmark Divergence
The UBS Constant Maturity Commodity Index (CMCITR) rose 5.1% in Q1, underperforming the Bloomberg Commodity Index (BCOM), which gained 8.8%. This divergence was primarily driven by differences in sector allocation.
CMCITR maintains a lower weighting in both precious metals and U.S. natural gas, which were two of the quarter’s strongest areas. Gold and silver each gained 18%, while U.S. natural gas surged 27% during the period.
CMCITR takes a disciplined approach by rebalancing monthly to maintain its target weightings, whereas BCOM allows its top-performing sectors to run without rebalancing. While this can lead to short-term outperformance for BCOM during strong market trends, CMCITR’s structured approach has historically supported stronger relative performance over the long term. In addition, CMCITR’s unique roll methodology, applied throughout the year, further enhances its performance relative to BCOM by optimizing how it handles futures contracts.
Sector Drivers and Strategic Takeaways
Precious Metals: Strong Demand in a Flight to Safety (+18.2%)
Gold and silver both surged 18% in Q1 2025, making the precious metals sector the top performer for the quarter. Ongoing global uncertainty — from geopolitical tensions to shifting trade alliances — has renewed investor interest in traditional safe-haven assets. Global central banks continued to increase their gold holdings, looking to diversify away from U.S. dollar assets. At the same time, Western investors began moving into gold and silver as a hedge against volatility and broader macro risks.
Industrial Metals: Policy-driven Rally Led by Copper (+7.5%)
The industrial metals sector posted solid gains, rising 7.5% for the quarter, supported largely by policy-driven market behavior. The Trump Administration’s tariffs on steel and aluminum, coupled with expectations of reciprocal measures from global trading partners, led to a wave of stockpiling across key markets. Copper stood out, rallying 25% and reaching new all-time highs, as investors anticipated tighter supply conditions and steady demand growth.
Energy: Geopolitical Pressures and Cold Weather Lift Prices (+4.4%)
The energy sector climbed 4.4% in Q1 as geopolitical conflicts and seasonal demand drove prices higher. Ongoing wars in the Middle East and Ukraine maintained a risk premium in oil markets, even as OPEC announced plans to boost production. In the final weeks of the quarter, President Trump’s threat of additional tariffs on buyers of Russian oil added further upward pressure to crude prices. Meanwhile, an unusually cold winter across the U.S. fueled a 27% spike in natural gas prices.
Agriculture: Mixed Results Weigh on Overall Performance (+1.2%)
Agricultural commodities had a muted quarter, ending up 1.2%, with mixed performance across subsectors. Coffee prices saw a sharp rally, rising 25% on supply concerns, but these gains were largely offset by a 23% decline in cocoa. U.S. grain prices also softened modestly, reflecting stable supply expectations and a lack of weather-driven catalysts.
Livestock: Steady Gains Driven by Cattle Prices (+4.3%)
The livestock sector delivered a solid return of 4.3% in Q1. Live cattle prices led the way, rising 7.8% on tighter supply and strong domestic demand. However, the sector’s overall gains were partially held back by a 2.3% decline in lean hog prices.
The chart below highlights the sector weight differences between CMCITR and BCOM.
CMCITR Rebalances Monthly to Fixed Annual Targets, While BCOM’s Weights Adjust With Market Movements.
Comparative Index Sector Weights
Source: VanEck, Bloomberg. Data as of March 2025.
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Outlook: Commodities Positioned for an Active Year Ahead
With a strong start to 2025, the commodity market enters the second quarter with several tailwinds still in place. Geopolitical risks, shifting trade dynamics, and a weaker U.S. dollar continue to support demand for real assets—particularly in sectors such as precious metals and energy. At the same time, supply disruptions, policy-driven market shifts, and variable weather patterns are likely to keep volatility elevated across key segments, presenting both risks and opportunities.
In this environment, a diversified and disciplined strategy—like that of the CMCITR —may prove especially valuable. Its monthly rebalancing and dynamic roll methodology help manage exposure through changing market conditions, positioning it to navigate uncertainty while capturing long-term trends.
As investors look to hedge against inflation and broader market volatility, commodities remain a relevant and potentially rewarding component of a well-balanced portfolio. The remainder of 2025 may offer a compelling backdrop for selective, active allocation within the asset class.
Learn more about the VanEck CM Commodity Index Fund and the VanEck CMCI Commodity Strategy ETF (CMCI), which seek to track, before fees and expenses, the CMCITR.
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Disclosures
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third-party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
All indices are unmanaged and include the reinvestment of all dividends, but do not reflect the payment of transaction costs, advisory fees or expenses that are associated with an investment in the Fund. An index’s performance is not illustrative of the Fund’s performance. Indices are not securities in which investments can be made. Past performance is no guarantee of future results.
The UBS Bloomberg Constant Maturity Commodity Index (CMCITR) is a total return rules-based composite benchmark index diversified across 29 commodity components from within five sectors, specifically energy, precious metals, industrial metals, agricultural and livestock.
Bloomberg Commodity Index (BCOM) provides broad-based exposure to commodities, and no single commodity or commodity sector dominates the index. Rather than being driven by micro-economic events affecting one commodity market or sector, the diversified commodity exposure of BCOM potentially reduces volatility in comparison with non-diversified commodity investments.
UBS AG AND ITS AFFILIATES (“UBS”) DO NOT SPONSOR, ENDORSE, SELL, OR PROMOTE CM COMMODITY INDEX FUND (THE “PRODUCT”). A DECISION TO INVEST IN THE PRODUCT SHOULD NOT BE MADE IN RELIANCE ON ANY OF THE STATEMENTS SET FORTH IN THIS WEBSITE. PROSPECTIVE INVESTORS ARE ADVISED TO MAKE AN INVESTMENT IN THE PRODUCT ONLY AFTER CAREFULLY CONSIDERING THE RISKS ASSOCIATED WITH INVESTING IN THE PRODUCT, AS DETAILED IN THE PROSPECTUS THAT IS PREPARED BY OR ON BEHALF OF VANECK (“LICENSEE”), THE ISSUER OF THE PRODUCT. UBS HAS LICENSED CERTAIN UBS MARKS AND OTHER DATA TO LICENSEE FOR USE IN CONNECTION WITH THE PRODUCT AND THE BRANDING OF THE PRODUCT, BUT UBS IS NOT INVOLVED IN THE CALCULATION OF THE PRODUCT, THE CONSTRUCTION OF THE PRODUCT’S METHODOLOGY OR THE CREATION OF THE PRODUCT, NOR IS UBS INVOLVED IN THE SALE OR OFFERING OF THE PRODUCT, AND UBS DOES NOT MAKE ANY REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE PRODUCT AND DISCLAIMS ANY LIABILITY FOR ANY INACCURACY, ERROR OR DELAY IN, OR OMISSION OF THE DATA.
Investments in commodities can be very volatile and direct investment in these markets can be very risky, especially for inexperienced investors.
VanEck CM Commodity Index Fund: You can lose money by investing in the Fund. Any investment in the Fund should be part of an overall investment program, not a complete program. Commodities and commodity-linked derivatives may be affected by overall market movements and other factors that affect the value of a particular industry or commodity, such as weather, disease, embargoes or political or regulatory developments. Derivatives use leverage, which may exaggerate a loss. An investment in the Fund may be subject to risks which include, but are not limited to, risks related to agricultural commodity sector, commodities and commodity-linked instruments, commodities and commodity-linked instruments tax, commodity index-related concentration, commodity index tracking, credit, debt securities, derivatives counterparty, derivatives, energy commodity sector, gap, interest rate, market, metals commodity sector, investments in money market funds, operational, passive management, regulatory, repurchase agreements, subsidiary investment, tax (with respect to investments in the Subsidiary), and U.S. Treasury securities risks, all of which may adversely affect the Fund. The use of commodity-linked derivatives such as swaps, commodity-linked structured notes and futures entails substantial risks, including risk of loss of a significant portion of their principal value, lack of a secondary market, increased volatility, correlation, liquidity, interest-rate, valuation and tax risks. Gains and losses from speculative positions in derivatives may be much greater than the derivative’s cost. Investment in commodity markets may not be suitable for all investors. The Fund’s investment in commodity-linked derivative instruments may subject the Fund to greater volatility than investment in traditional securities.
VanEck CMCI Commodity Strategy ETF: An investment in the Fund may be subject to risks which include, among others, risks related to investing in the agricultural commodity sector, commodities and commodity-linked instruments, commodities and commodity-linked instruments tax, derivatives counterparty, energy commodity sector, metals commodity sector, U.S. treasury bills, Subsidiary investment, commodity regulatory and tax risks with respect to investments in the Subsidiary, gap, cash transactions, credit, debt securities, interest rate, derivatives, commodity index tracking, repurchase agreements, regulatory, market, operational, authorized participant concentration, no guarantee of active trading market, trading issues, fund shares trading, premium/discount and liquidity of fund shares, non-diversified, commodity index-related concentration, and passive management risks, all of which may adversely affect the Fund. The use of commodity-linked derivatives such as swaps, commodity-linked structured notes and futures entails substantial risks, including risk of loss of a significant portion of their principal value, lack of a secondary market, increased volatility, correlation, liquidity, interest-rate, valuation and tax risks. Investment in commodity markets may not be suitable for all investors. The Fund’s investment in commodity-linked derivative instruments may subject the Fund to greater volatility than investment in traditional securities. The level of derivatives counterparty risk may be heightened due to the Fund currently only having a single counterparty available with which to enter into swap contracts on the Index.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
© 2025 Van Eck Securities Corporation, Distributor, a wholly-owned subsidiary of Van Eck Associates Corporation.
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Disclosures
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third-party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
All indices are unmanaged and include the reinvestment of all dividends, but do not reflect the payment of transaction costs, advisory fees or expenses that are associated with an investment in the Fund. An index’s performance is not illustrative of the Fund’s performance. Indices are not securities in which investments can be made. Past performance is no guarantee of future results.
The UBS Bloomberg Constant Maturity Commodity Index (CMCITR) is a total return rules-based composite benchmark index diversified across 29 commodity components from within five sectors, specifically energy, precious metals, industrial metals, agricultural and livestock.
Bloomberg Commodity Index (BCOM) provides broad-based exposure to commodities, and no single commodity or commodity sector dominates the index. Rather than being driven by micro-economic events affecting one commodity market or sector, the diversified commodity exposure of BCOM potentially reduces volatility in comparison with non-diversified commodity investments.
UBS AG AND ITS AFFILIATES (“UBS”) DO NOT SPONSOR, ENDORSE, SELL, OR PROMOTE CM COMMODITY INDEX FUND (THE “PRODUCT”). A DECISION TO INVEST IN THE PRODUCT SHOULD NOT BE MADE IN RELIANCE ON ANY OF THE STATEMENTS SET FORTH IN THIS WEBSITE. PROSPECTIVE INVESTORS ARE ADVISED TO MAKE AN INVESTMENT IN THE PRODUCT ONLY AFTER CAREFULLY CONSIDERING THE RISKS ASSOCIATED WITH INVESTING IN THE PRODUCT, AS DETAILED IN THE PROSPECTUS THAT IS PREPARED BY OR ON BEHALF OF VANECK (“LICENSEE”), THE ISSUER OF THE PRODUCT. UBS HAS LICENSED CERTAIN UBS MARKS AND OTHER DATA TO LICENSEE FOR USE IN CONNECTION WITH THE PRODUCT AND THE BRANDING OF THE PRODUCT, BUT UBS IS NOT INVOLVED IN THE CALCULATION OF THE PRODUCT, THE CONSTRUCTION OF THE PRODUCT’S METHODOLOGY OR THE CREATION OF THE PRODUCT, NOR IS UBS INVOLVED IN THE SALE OR OFFERING OF THE PRODUCT, AND UBS DOES NOT MAKE ANY REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE PRODUCT AND DISCLAIMS ANY LIABILITY FOR ANY INACCURACY, ERROR OR DELAY IN, OR OMISSION OF THE DATA.
Investments in commodities can be very volatile and direct investment in these markets can be very risky, especially for inexperienced investors.
VanEck CM Commodity Index Fund: You can lose money by investing in the Fund. Any investment in the Fund should be part of an overall investment program, not a complete program. Commodities and commodity-linked derivatives may be affected by overall market movements and other factors that affect the value of a particular industry or commodity, such as weather, disease, embargoes or political or regulatory developments. Derivatives use leverage, which may exaggerate a loss. An investment in the Fund may be subject to risks which include, but are not limited to, risks related to agricultural commodity sector, commodities and commodity-linked instruments, commodities and commodity-linked instruments tax, commodity index-related concentration, commodity index tracking, credit, debt securities, derivatives counterparty, derivatives, energy commodity sector, gap, interest rate, market, metals commodity sector, investments in money market funds, operational, passive management, regulatory, repurchase agreements, subsidiary investment, tax (with respect to investments in the Subsidiary), and U.S. Treasury securities risks, all of which may adversely affect the Fund. The use of commodity-linked derivatives such as swaps, commodity-linked structured notes and futures entails substantial risks, including risk of loss of a significant portion of their principal value, lack of a secondary market, increased volatility, correlation, liquidity, interest-rate, valuation and tax risks. Gains and losses from speculative positions in derivatives may be much greater than the derivative’s cost. Investment in commodity markets may not be suitable for all investors. The Fund’s investment in commodity-linked derivative instruments may subject the Fund to greater volatility than investment in traditional securities.
VanEck CMCI Commodity Strategy ETF: An investment in the Fund may be subject to risks which include, among others, risks related to investing in the agricultural commodity sector, commodities and commodity-linked instruments, commodities and commodity-linked instruments tax, derivatives counterparty, energy commodity sector, metals commodity sector, U.S. treasury bills, Subsidiary investment, commodity regulatory and tax risks with respect to investments in the Subsidiary, gap, cash transactions, credit, debt securities, interest rate, derivatives, commodity index tracking, repurchase agreements, regulatory, market, operational, authorized participant concentration, no guarantee of active trading market, trading issues, fund shares trading, premium/discount and liquidity of fund shares, non-diversified, commodity index-related concentration, and passive management risks, all of which may adversely affect the Fund. The use of commodity-linked derivatives such as swaps, commodity-linked structured notes and futures entails substantial risks, including risk of loss of a significant portion of their principal value, lack of a secondary market, increased volatility, correlation, liquidity, interest-rate, valuation and tax risks. Investment in commodity markets may not be suitable for all investors. The Fund’s investment in commodity-linked derivative instruments may subject the Fund to greater volatility than investment in traditional securities. The level of derivatives counterparty risk may be heightened due to the Fund currently only having a single counterparty available with which to enter into swap contracts on the Index.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
© 2025 Van Eck Securities Corporation, Distributor, a wholly-owned subsidiary of Van Eck Associates Corporation.