%Commodities traders on Wall Street are closing out their worst year since before the Covid-19 pandemic struck in 2020 as volatility subsides and prices rise in several categories.
More than 250 Wall Street firms and brokerages, including %GoldmanSachs (NYSE: $GS) and %JPMorganChase (NYSE: $JPM), expect combined annual revenues from commodities trading of $10.6 billion U.S.
That’s nearly 20% below last year’s total, according to data from Coalition Greenwich, one of the top data providers when it comes to commodities such as gold, oil, and orange juice.
The decline is due largely to the fact that turbulence in commodities markets has subsided after years of volatility caused by Covid-19 and Russia’s invasion of Ukraine.
In a report, Coalition Greenwich said that the commodities trading boom “is now fading,” and forecasts a further revenue decline of 3% in 2025.
While some commodity prices such as crude oil and gold have either stabilized or risen steadily to record highs, pockets of volatility remain for commodities such as cocoa and coffee beans.
However, most of the volatility today is in agriculture commodities and due to poor crops and harvests caused by climate change, said Coalition Greenwich.
In recent years, Wall Street banks and brokerages have beefed up their commodity trading floors to take advantage of price volatility.
The move has paid off for some firms. %BankofAmerica (NYSE: $BAC), for example, outperformed in commodities trading this year, with revenue from the business rising 12% year-over-year.
Several Wall Street banks also continue to profit in energy markets as oil and natural gas prices move based on geopolitical events.
Topping the performance in commodities trading this year has been privately held hedge fund Citadel, which generated nearly $4 billion U.S. in profits despite the steady decline in volatility.
