Bullish sentiment propelled the S&P GSCI higher by 16.4% in May, its best monthly performance in 11 years. The broad commodity index’s more than 50% exposure to energy was a key contributor to its performance. Energy led the way, with the WTI-based S&P GSCI Crude Oil up 55.0%, bouncing impressively off the lows in April. Despite economic data points, like U.S. consumer spending dropping the most on record, commodities posted an overall strong month. Industrial and precious metals exhibited positive gains, while agriculture and livestock were mixed.

The S&P GSCI Energy rose 35.2% in May, completely retracing the poor performance in April. As countries slowly opened from lockdowns, expectations of a pickup in demand coincided with voluntary and involuntary production cuts. Already in a dire situation pre-pandemic, there are now expectations for a wave of bankruptcies in the U.S. shale space, further adding to the production cuts. Markets will be focused on the June OPEC+ meeting for clues regarding further coordination to rebalance the oil markets. The S&P GSCI Natural Gas was the one laggard in the energy space, down 16.7% on the month, due to drastically less seasonal demand and rumblings of storage space becoming increasingly full.

In the metals complex, all eyes were on iron ore, with the S&P GSCI Iron Ore jumping 23.4%. Growing fears about the security of Brazilian iron ore exports, given the growing number of COVID-19 infections among miners, combined with strong Chinese demand for the steel-making ingredients to push iron ore prices through the USD 100 per ton level at the end of May for the first time in 10 months.

The S&P GSCI Precious Metals rose 4.2% in May. While gold continued its impressive rally, it was silver that shone brightest over the month. The S&P GSCI Silver rallied 23.6%, buoyed by supply disruptions due to lockdowns in major silver producing countries, such as Peru and Mexico, and strong demand for silver by silver-backed exchange-traded funds. Silver, which is used in items like microchips and solar panels, has more industrial applications than gold and tends to underperform during recessions and outperform when economies expand.

One would think with the amount of baking occurring in the U.S. during lockdown, grains would display some bullish undertones. However, this was not the case, as the S&P GSCI Grains fell 0.4% in May, with market participants focused on record U.S. supplies and the reignition of the U.S.-China trade war. The International Grains Council raised its production forecast for the 2020-2021 season by 12 million metric ton, while cutting its consumption outlook by 4 million over that period. The S&P GSCI Wheat fell 0.7% but was one of the only commodities with YTD performance down only single digits.

The S&P GSCI Livestock gained 5.4% last month, with the S&P GSCI Live Cattle surging 10.1%. After posting a new 10-year low in April, the same week WTI prices dipped into negative territory, steer prices bounced back, as meatpacking plants in the U.S. dealt with bottlenecks caused by worker cases of COVID-19, while meat demand remained resilient.