Commodities' outlook dims as Trump disbands councils

President Donald Trump's decision last week to disband the Manufacturing Council and Strategy & Policy Forum not only puts his agenda to revitalise the nation's infrastructure in jeopardy, it also weakens the precarious support commodities such as copper, steel and crude oil have relied upon.

Although not stellar, global commodity prices had shown decent support ever since it became clear that Trump had a shot at the White House, with infrastructure at the top of his agenda.

As recently as August 15 he issued an executive order directing federal agencies to more quickly review the environmental effects of infrastructure projects.

And now the crutch has broken. The destruction of both councils delivered a major setback in the eyes of traders. These leaders, who previously agreed to join the forums to advise Trump on economic issues, collaborated to step down and disband the councils after his controversial remarks surrounding the white supremacist marchers in Charlottesville, Virginia.

With progrowth in jeopardy, commodities face more headwinds than potential upsides. The markets cannot rely solely on the weakness of the US dollar. The US may have to live with its existing infrastructure while commodity bulls should think twice about their long positions.