COVID-19 continued to wreak havoc across commodities markets in April. The S&P GSCI fell 9.67% in April and 47.92% YTD. Economic data continued to weaken into uncharted territory. Supply chains crucial to the flow of commodities from extraction to consumption experienced a sudden shut off and demand collapsed. Energy and agriculture underperformed, while metals offered Read more […]
Over the past five years, the S&P GSCI Coffee underperformed the other soft commodities, as can be seen in Exhibit 1. Broad oversupply issues that have been seen in most commodities have been particularly pronounced in the coffee market. In addition to the major coffee-producing countries’ respective economic problems, these countries also generally suffer from Read more […]
Commodities markets hit the summer doldrums in July. The S&P GSCI was down 0.2% for the month and 13.1% YTD. The Dow Jones Commodity Index (DJCI) was down 0.8% in July and up 6.1% YTD, reflecting its lower energy weighting. Impressive rallies in nickel and silver markets were pitched against a slump in agriculture prices, Read more […]
Commodities markets resumed their upward trajectory in June. The S&P GSCI was up 4.4% for the month and up 13.3% YTD. The Dow Jones Commodity Index (DJCI) was up 3.1% in June and up 6.9% YTD, reflecting its lower energy weighting. A recovery in petroleum prices and an impressive rally in gold were the main Read more […]
After much economic activity this week, the Fed announced inflation moved “somewhat closer” to the objective and is showing signs of firming after running below its 2% target for the past two years. In the last June report from the United States Department of Labor, food prices continued to increase although at a slower pace and unleaded gasoline prices had Read more […]
I fear the risk premium for agriculture and livestock may vanish sometime soon as climate change and El Nino drive up food prices. When investing in commodities as an asset class there are five components of return to be earned by using futures. While each component’s contribution to performance varies through time depending on the Read more […]
Finally, in April, commodities got hot enough to turn around even the base metals (also known as the industrial metals,) up 1.8% for the month. Although this comeback is not driven by the main supply shocks we are experiencing in energy and agriculture, it is fundamental in nature. China’s State Reserves Bureau (SRB) is now buying copper Read more […]
It is no surprise that now might be the perfect environment for brewing commodities. The S&P GSCI was up 4.5% in February and was in backwardation for the first time in February since 2004. In 2004, the S&P GSCI returned 17.3%. 22 of 24 commodities in the S&P GSCI were positive in February. All 5 sectors were positive, led by agriculture, Read more […]
Psychologists have studied feelings of Olympic medalists for decades to find: “If you set aside the happy people who win gold and look only at the people who come in second and third, it’s the men and women with bronze medals who invariably look happier than the athletes who won silver.” To investors who have Read more […]
There are too many funny coffee jokes to single one out but this one I found seriously relevant: Though I take my coffee black, I also take it seriously since it is one of the commodities in the S&P GSCI and DJ-UBS. Coffee has been the best performing commodity this year, up 23.9%. As I Read more […]
