August 2021 Kettera Strategies Analysis Report
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In August 2025, systematic trend programs demonstrated impressive performance in the soft commodities sector. This outperformance was driven by several factors, including strong price momentum, market structure, fundamental factors, and sector-specific dynamics.
The key soft commodity markets that showed significant gains were coffee, cocoa, orange juice, and soybeans. Coffee experienced a "spectacular breakout," while soybeans and cocoa followed this strength, and orange juice continued a rebound from earlier gains.
The market structure in these soft commodity markets was characterized by persistent trends. As of mid-August 2025, about 48% of markets still showed medium to strong trend strength, providing enough support for systematic trend following strategies despite some softness in the overall trend environment.
Sector-specific fundamental factors also played a crucial role. For instance, meat prices, partly linked to feed costs (soybeans), were rising due to supply constraints such as shrinking US beef herds. These supply-driven fundamentals supported soft commodity rallies.
Moreover, there was a distinct divergence from industrial metals. While soft commodities advanced, copper prices plunged substantially after new tariffs on copper products, weighing on broader commodity indices but leaving soft commodity trend signals intact.
Systematic programs' multi-sector dynamic allocation was another significant factor. Programs like the R Best World Select approach systematically allocate risk across sectors, including agricultural and soft commodities, to capture trends in rising or falling markets. Their flexible long-short exposure to softs likely capitalized on these strong trends in coffee, cocoa, soybeans, and orange juice.
August was a challenging month for directional trading in other sectors, such as fixed income and FX, as well as in the metals markets and crude and refined products, with the exception of natural gas long and bull spreads trades in the second half of the month.
The performance analysis of systematic trend programs was based on benchmarks such as the IndexIQ Hedge Global Macro Beta Index, the Societe Generale Trend Index, the SG CTA Index, and the Societe Generale Short-term Traders Index.
It is important to note that the "style baskets" referenced in this article are research tools created by Kettera for analysis and comparison purposes, not investible products or index products. The views expressed in this article are those of the author and not necessarily those of AlphaWeek or The Sortino Group.
In conclusion, systematic trend programs outperformed in the soft commodities sector in August 2025 because of sustained and strong price trends in key soft markets, driven by both market dynamics and fundamental supply constraints. This was contrasted against weakness in other sectors, showcasing the importance of sector rotation and diversified trend exposure within these programs.
- The strong performance of systematic trend programs in the soft commodities sector in August 2025 was partly attributable to their ability to invest in technologies that analyze market trends effectively, capitalizing on the persistent trends in key soft commodity markets such as coffee, cocoa, soybeans, and orange juice.
- In the realm of finance, the outstanding results achieved by systematic trend programs in the soft commodities sector in August 2025 underscore the significance of strategic investing in technology, as it enables these programs to accurately gauge rising or falling trends, specifically in soft commodities like coffee, cocoa, soybeans, and orange juice, thereby generating impressive returns.
