Monthly Commodity Insights – October 2020: Commodities wary for US elections

by: Georgette Boele , Hans van Cleef , Casper Burgering

In this publication: What will a Biden presidency bring for commodities?

Monthly-Commodity-Insights-October-2020.pdf (856 KB)
  • The US Presidential elections are approaching. On 3 November (or before by mail) US citizens will choose a president.
  • Our US economist has defined four possible outcomes of the US presidential elections. The most likely outcome is that Biden wins the presidency. What will a Biden presidency bring for commodities?
  • We expect that Democratic policies would probably result in a considerably stronger US economy in the coming years. This is positive for commodities in general overall, especially if Chinese growth is resilient.
  • Moreover we also expect US real rates to remain negative or to decline further in 2021. This supports commodity prices due to the historical negative relationship between the two.
  • The dollar will probably be supported in the near-term (= downside price risk dollar-denominated commodities) but we expect weakness in 2021. Some near-term weakness in commodity prices will likely result in higher prices afterwards.