Grains Go Wild as Bond Market Story Unfolds

The recent market trends in soft commodities have been dramatic, particularly in grains. Wheat has surged by 12%, cocoa is up 10%, oats are up 9%, and soybean meal, palladium, corn, soybeans, and cotton are all showing strong gains. This outperformance can be attributed to a genuine rotation of capital within the real assets trade.

The Bloomberg Agriculture index has broken above its three-decade downtrend line for the first time, while Peter Brandt's CBOT grain book is carrying long positions in Beans, Corn, Wheat, and Meal. Brandt notes that this is his heaviest grain position in years, alongside long Bitcoin and other assets.

The supply story behind these gains is not just chart-driven; real war premium and droughts are contributing to the price increases. Russia's actions on Black Sea grain shipments and China's heat and rain-affected crops are also significant factors.

However, the bond market is a key driver of these trends. The US Treasury General Account has been used to fund bigger bond buybacks, which has shaken the bond market and led to lower yields. This, in turn, has weakened the US dollar, contributing to gold's run before its recent breather.

Willem Middelkoop highlighted Benchmark Minerals' Q2 2026 copper production table, showing declining production year-on-year among top producers. Lukas Ekwueme noted that Chilean output is expected to peak in 2027, just as AI infrastructure and the US push to reshore manufacturing increase demand for copper.

The scarce input of copper commands high margins, benefiting its equity holders. Rapid Critical Metals has extended a silver system with strong hits, while Redstone Resources and Barton Gold are also worth watching.