Bloomberg Commodity Index (BCOM)

Rebalancing weight is not just a personal resolution for January, the Bloomberg Commodity Index (BCOM) trims some weights as well.

The BCOM is one of the most widely followed benchmarks for commodity exposure. It’s used by passive commodity ETFs, pension and asset-allocation funds, index-tracking strategies, and by plenty of discretionary traders following the flows.

BCOM tracks a diversified basket of commodities across sectors like energy, industrial & precious metals, agriculture, and livestock.

Each commodity has a target weight (%), with rules to stop any single commodity (or sector) from dominating the index.

Once a year in January the index rebalances. That means weightings are adjusted based on predefined rules. Funds that track the index must trade to reflect those new weights. Not because they suddenly love or hate a commodity but because the rulebook tells them to.

Around rebalancing, markets can experience temporary buying or selling pressure. Prices may move in ways that appear disconnected from fundamentals. This doesn’t mean fundamentals stop mattering just that in the short term flows may have a larger influence.

Index rebalancing doesn’t change long-term supply and demand but it can distort short-term price action and that can create both opportunity and risk.

Interesting to note that cocoa joins the index in 2026…as if chocolate prices weren’t volatile enough already!