George Cheveley, Natural Resources Portfolio Manager; Paul Gooden, Natural Resources Portfolio Manager; Dawid Heyl, Natural Resources Portfolio Manager at Ninety One

Commodities enter 2026 on a solid footing, with gold and copper underpinned by robust structural drivers and the potential for recovery building in parts of the energy and agriculture complex. Against a backdrop of tighter base-metal markets, evolving oil supply dynamics and a likely turn in grain balances, selectivity is increasingly important across natural resources.

Big picture: a firmer starting point for commodities

Gold remains well supported by a softer US dollar, persistent geopolitical risks and continued central-bank demand. For gold miners, disciplined cost control and materially higher margins compared with 2024 underpin a constructive outlook for precious-metals equities.  Copper is firmly in focus among base metals. Supply disruptions and strong demand from power infrastructure and data-centre build-out pushed prices to new highs in 2025, and those trends remain in place. Aluminium is also benefitting from the higher copper price environment as users seek substitutes, while iron ore and coal look broadly steadier for now.

In energy, oil has been under pressure as incremental OPEC supply is absorbed, but tighter medium-term supply/demand balances could support a recovery later in the year. The US intervention in Venezuela adds further uncertainty, but the long-term implications for the oil price are negative.  Natural-gas demand remains on an upward trajectory, driven by LNG export growth and the energy requirements of data centres. In agriculture, grain markets are expected to tighten after last year’s surplus as lower planting meets steady biofuel and feed demand.

Precious metals: support remains in place for gold

Gold has delivered two years of very strong performance, raising natural questions about how much upside remains. The key drivers, however, still look supportive: a weaker dollar, ongoing geopolitical tensions, expectations of US Federal Reserve rate cuts, heightened concern over fiscal deficits and sustained central-bank buying.

George Cheveley, Natural Resources Portfolio Manager, said: “Gold’s rally has been powerful, but it has also been grounded in fundamentals that are still very much in place. With real rates likely to fall and central banks continuing to diversify their reserves, we see more reason for gold to consolidate or edge higher than to sell off sharply.”  At current price levels, gold miners’ margins are estimated to be four to five times higher than in 2024, reinforcing the investment case for select producers. Silver also looks well supported in the higher trading range it entered last year, and platinum’s persistent market deficit – with supply running well below demand – is likely to require higher prices to draw out stockpiled material.

Base metals and bulks: copper leads, others steady

Base metals, particularly copper and aluminium, delivered strong gains in 2025, while iron ore and coal were broadly flat. Tight supply and firm demand continue to make copper the standout market.

Cheveley continued: “Copper is entering 2026 as the tightest of the major base metals. Supply disruptions have been widespread and inventories are low, while demand from power grids and data-centre infrastructure remains robust. Against that backdrop, we think copper-exposed equities still have an attractive risk-reward profile.”

Aluminium starts the year on solid ground, benefitting from both demand growth and substitution from copper. However, capacity additions in Indonesia from 2027 are likely to weigh on the medium-term outlook. Iron ore and coal markets are expected to trade sideways through 2026 as the Simandou project in Guinea ramps up and China’s centralised buyer, China Mineral Resources Group, takes a more active role. Even so, long-term iron-ore price expectations look unduly conservative relative to the cost curve and demand trends.

Energy: near-term pressure, medium-term opportunity

Oil markets currently look oversupplied, and Ninety One’s Natural Resources team enters 2026 underweight the sector with a defensive tilt. As incremental OPEC barrels are absorbed, pricing is likely to remain soft in the early part of the year. Beyond that, capacity constraints at both OPEC and US shale could start to tighten the balance. Paul Gooden, Natural Resources Portfolio Manager, said: Overall, we expect oil to find a bottom during the first half of 2026 and to recover later in the year as it becomes clear that both OPEC and US shale are operating near capacity. That could present an attractive entry point into oil‑leveraged equities.

“However, recent geopolitical events in Venezuela add further uncertainty. The near-term implications are ambiguous, but the long-term implications for the oil price are negative as Venezuela has significant untapped reserves, although it would take several years to develop them. That said, the implications for energy equities are nuanced, with for example select oil services companies and US refiners potential beneficiaries,” noted Gooden.

The picture for natural gas volumes is more clearly constructive. US demand continues to grow, supported by expanding LNG export capacity along the Gulf Coast and the surging power needs of data centres.  “Within our energy holdings we have exposure towards companies that are positioned to benefit from this structural growth in gas volumes, and to companies where we are ‘paid to wait’ for the eventual recovery in oil prices,” Gooden added.

Agriculture: grains poised for a turn

Grain markets were oversupplied in 2025 following record harvests in the US and other major producing countries. While inventories have risen in those regions, stock levels elsewhere remain moderate, leaving room for balances to tighten in 2026.

Dawid Heyl, Natural Resources Portfolio Manager said: “Low grain prices are already discouraging planting, particularly on marginal land. Early indications in the US point to more fallowing and a shift towards alternative crops. If that trend continues, we expect corn and soybean balances to tighten by the second half of 2026.”

On the demand side, biofuels and feed remain key drivers. The current US biofuel target, with ethanol as the largest component, implies higher production from 2025 to 2026. Strong livestock prices are also likely to encourage herd rebuilding, supporting feed-grain demand. Together, these dynamics suggest a more favourable environment for select agricultural equities as the year progresses.

Positioning: selective, active and ready to adjust

Across natural resources, positioning reflects both the differentiated outlook between sectors and the need for flexibility as conditions evolve.

The team is currently underweight energy and agriculture, overweight precious metals, and broadly at-weight in base metals and bulks. Within each segment, there is significant dispersion in asset quality, management capability, operational resilience and political exposure. Gooden concluded: “An active and highly selective approach is essential in this environment. The headline story for a commodity can look positive, but the range of outcomes at company level is wide. We want to be very deliberate about where we take risk, and ready to adjust as the year unfolds.”

ENDS