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The U.S. capture of Venezuelan President Nicolas Maduro over the weekend left agricultural markets, equities and other assets that are typically sensitive to geopolitical shocks unscathed, though gold, a traditional haven asset, jumped on Monday.
So do gold traders see something that other market participants don’t?
Corn, wheat and soybean futures all booked gains, as did cattle and lean hogs. Stocks rose, with the Dow Jones Industrial Average closing at a record as the S&P 500 and Nasdaq Composite also rose. The dollar initially strengthened, but later gave up gains, as measured by the ICE U.S. Dollar Index.
Aside from the gold rally, which saw the yellow metal rise 2.9% to trade near $4,453 an ounce, there were few signs of worry. Oil ended the day with solid gains, but is coming off a brutal 2025 that pressured both WTI, the U.S. benchmark, and Brent crude, the global benchmark, amid fears of a building glut. While the case can be made for a drop in oil prices if more Venezuelan production comes on line, the risk of an upside oil-price shock if the situation goes off the rails appears low.
It’s possible that gold buyers feel more attuned to broader geopolitical worries surrounding the Venezuela situation. President Donald Trump, speaking to reporters aboard Air Force One on Sunday, threatened Colombia President Gustavo Petro, who sharply criticized the U.S. operation in Venezuela. Trump called him a “sick man who likes making cocaine and sending it to the United States, and he’s not going to be doing it very long,” according to Politico. Trump also said the U.S. “needs” Greenland, the autonomous Danish territory, for national security reasons.
But it’s China that may be the more important factor as grain market participants gauge the fallout from last weekend’s events, particularly given the trade truce agreed by Trump and Chinese leader Xi Jinping in late October.
“China has invested heavily in Venezuelan energy and political influence throughout Latin America, making this outcome a meaningful strategic setback for Beijing,” said Adrian Helfert, chief investment officer of multi-asset strategies at Westwood, in a Monday note.
Chinese officials have already drawn comparisons to Taiwan, suggesting Beijing may view this as a template for U.S. intervention in its own sphere of influence, Helfert said. Meanwhile, other Latin American nations with China exposure will be closely monitoring both U.S. willingness to intervene and Chinese capacity to respond.
Notable…With markets largely shrugging off the Venezuela developments, weather remains the top South American priority for grain and soy complex traders. And they’re keeping an early eye on Argentina.
World Weather Inc. on Monday said stress to crops will increase through this weekend in a large part of west-central into southern Argentina, where rain should not be great enough to prevent continued drying of the soil with serious stress to crops likely from central and southern San Luis and southwestern Cordoba to La Pampa where the top and subsoil moisture is already short. Northern and east-central Argentina have mostly favorable soil moisture and with significant rain expected Thursday into Saturday crop and soil conditions will be favorable through the next two weeks.
Quotable…“We believe commodities are going to occupy a much greater place in asset allocation. A lot of the foundations, pensions and endowments we work with really have very little exposure to commodities. One of the things we think Venezuela represents is that there’s a resource nationalism that’s going on whether China, Russia or the United States.” – Jason Trennert, chairman and CEO of Strategas Research Partners, in an interview with CNBC on Monday.
Big grain traders end Amazon conservation pact…A lobbying group representing Brazilian grain trading and crushing firms told authorities in the state of Mato Grosso that it and several of its members are quitting a nearly 20-year old agreement that protected the Amazon basin from deforestation by soy farming, Reuters reported Monday. The moratorium had barred signatories from buying soybeans grown on farms on Amazonian land deforested after July 2008. The pact was credited with significantly slowing deforestation. Aprosoja-MT, an association representing farmers in Mato Grosso that had pressured companies for years to end the pact, welcomed the announcement, the report said. The farmer group described the decision as a victory, describing the moratorium as illegal and unfair to producers who comply with the Brazilian Forest Code.