Wall Street Commodity Traders Brace for Toughest Year Since Pre-Covid

Wall Street commodity trading is poised to face its weakest performance since the pandemic, as the lucrative volatility that drove massive gains in recent years subsides. The combined net revenues of over 250 firms, including Goldman Sachs, Citigroup, and JPMorgan Chase, are projected to fall nearly 20% in 2024, reaching $10.6 billion, according to Coalition Greenwich data.

Wall Street’s Commodity Revenue Decline Raises Questions

Wall Street’s commodity desks are seeing their trading boom dwindle. Angad Chhatwal of Coalition Greenwich noted that the “supercycle” in revenues following the pandemic and geopolitical disruptions has faded over the last six-to-eight quarters. Revenue is expected to slip further by 3% in 2025, reflecting the end of heightened market turbulence caused by Covid-19 and Russia’s invasion of Ukraine.

Even industry leaders like Glencore and Trafigura have reported diminished trading profits this year. Despite this downturn, commodity trading revenues remain higher than pre-2019 levels, when they averaged $5-8 billion annually.

Wall Street Eyes Strategic Expansion Amid Challenges

Banks like Bank of America are outperforming their peers by capitalizing on regional market turbulence and expanding their presence in Asia and Europe. Bank of America’s commodities revenue surged 12% in the third quarter, driven by investments in gas and metals trading. Citi, meanwhile, has expanded its North American commodities desk, adding key hires from rival firms, signaling a commitment to long-term opportunities.
As volatility-driven profits fade, Wall Street commodity desks are increasingly focused on sustainable energy transitions, drawing interest from buyside investors. This pivot marks a critical shift in how the industry navigates changing market dynamics and prepares for a more sustainable future.

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