Commodities Performance in 2008

Sunday, December 28th, 2008

Commodity price performance has been a wild ride in 2008. The record of price movement is outlined in the table and chart below. For each commodity, the table details year-to-date (YTD) %-age change, drop from 52-week high, and start of year to the 52-week high.

Oil has had the roughest ride falling 62% YTD, 75% from its 52-week high, and preceded by a rise of 53% to its 52-week high. This was followed by Copper, Platinum, and Natural Gas, which had a meteoric rise to its 52-week high of 83%.

Most of the commodities, save Gold, have behaved in kind, thanks to the long-only commodity indices like GSCI which enabled investors of all kinds to invest naked in long-only baskets of commodities. They all went up together, and they all came down together. Platinum and Silver, the other two precious metals dropped along with other commodities, while Gold resumed its dual status as favoured currency and store of value during periods of turmoil.

Commodities are indeed more volatile than stocks. When, and if, we see the return of expansionary and/or inflationary (or worse, hyper-inflationary) conditions, however, these will be a key asset class to allocate to. With all of the printing presses at the Fed whirring right now, some would say its inevitable.

Tags: Array, asset class, Baskets, Commodities, Commodity Indices, Commodity Price, Copper, Currency, Dual Status, Gsci, Investors, Kind Thanks, Meteoric Rise, Natural Gas, Periods, Platinum, precious metals, Price Performance, Printing Presses, Table Details, Turmoil, Wild Ride
Posted in Commodities, Gold, Markets, Oil and Gas | No Comments »

Commodities Snapshot

Sunday, December 7th, 2008

If you look closely at the charts for Natural Gas, Platinum, Copper, Silver, you can see that these are experiencing a U-shaped flattening of prices. Oil is continuing on its epic, stronger downtrend. For the time being, there appears to be little support for commodities prices as weakening economic fundamentals, sentiment, negative wealth effects and deleveraging are leading to vicious-cycle demand destruction. A turn in the Baltic Dry Index while still not anticipated would herald a favourable turn in global activity.

Charts: Bespoke Investment Group

Tags: Activity Charts, Baltic Dry Index, Blog, Br, Chart, Commodities, Commodities Prices, Copper, Dow, Eco, Economic Fundamentals, Global Activity, Global Investment, Gold, Img, Investment, Investment Group, Natural Gas, oil, Platinum, Sentiment, Silver, Snap, Snapshot, Vicious Cycle, Wealth Effects
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Baltic Dry Index: A Valuable Leading Indicator?

Friday, December 5th, 2008

The Baltic Dry Index is a very important indicator of the health of trade globally, as it measures shipping activity in dry cargo.

Take a look at the chart below: According to the BDI, one of the purest economic indicators, the activity of shipping dry bulk cargo, mainly consisting of commodities such as coal, steel, iron ore, and cement, has almost completely ground to a halt, as indicated by the crash in the index’s value.

The BDI offers a real time glimpse at global raw material and infrastructure demand. Unlike stock and commodities markets, the Baltic Dry Index is totally devoid of speculative players. The trading is limited only to the member companies, and the only relevant parties securing contracts are those who have actual cargo to move and those who have the ships to move it. ^[1]

Another interesting feature of the BDI, is its high correlation to equity markets. Take a look at BDI vs. S&P500 and FXI (China 25 Index iShare), Crude Oil and Copper:

Baltic Dry Index vs. S&P 500

Baltic Dry Index vs. FXI (FTSE Xinhua 25 Index iShare)

Baltic Dry Index vs. Crude Oil

Baltic Dry Index vs. Copper

We’ll keep an eye on credit markets, and the Baltic Dry Index as indicators of the vitality (or lack thereof) of the economy and markets and keep you posted.

As goes the BDI (a leading indicator), so goes the economy, and perhaps equity markets (and commodities, we might add).

At the time of the publishing of this article, the BDI stands at 663 pts.

Tags: Array, Baltic Dry Index, Bdi, Blog, Br, Bulk Cargo, Cargoes, Cement, Chart, China, Coal, Commodities, Commodities Prices, Copper, Correlation, Crash, Credit, Credit Market, Credit Markets, Crude Oil, Debacle, Dow, Dry Cargo, Eco, Economic Indicators, Economy, Equity Market, Failure, FTSE, Ftse Index, Ftse Xinhua, Fxi China, Glimpse, Grains, Health, Img, Infrastructure, Investment, Iron Ore, Ishare, Issuance, Leading Indicator, Lehman Brothers, Loc, Markets, Measures, Member Companies, oil, P500, Php, Precipitate, Raw Material, Relevant Parties, S&P 500, S&P500, Shipping Activity, Time Glimpse, Trading, Value, Vitality
Posted in Commodities, Credit Markets, Economy, Markets, Oil and Gas | No Comments »

Commodity Snapshot

Monday, April 7th, 2008

April 7, 2008 - Courtesy of Bespoke Investment Group - Below we feature, as no one else does better, Bespoke’s commodity snapshot. It gives you an at-a-glance view of where commodities prices are in relative terms. 

Below we highlight our trading range charts of ten major commodities.  The green shading represents two standard deviations above and below the commodity’s 50-day moving average.  When the price moves above or below this trading range, the commodity is considered overbought or oversold. 

After a pullback from $110 to $100, oil is now trading at $104, which is just above the middle of its trading range.  Natural gas declined sharply on the commodity pullback a couple of weeks ago, but it has since moved higher and is almost back to new highs.  Declines in silver, platinum, wheat and copper left prices right in the middle of their trading ranges, while declines in gold and coffee put them close to oversold territory.  Corn has actually moved back to new highs and is now trading above the top of its trading range.

Tags: Agriculture, Chart, coffee, Commodities, Commodities Prices, Commodity, Copper, Corn, Declines, energy, Glance View, Gold, Investment, Investment Group, Metals, Moving Average, Natural Gas, New Highs, oil, Platinum, Pullback, Range Charts, Relative Terms, Shading, Silver, Silver Platinum, Snapshot, Standard Deviations, Trading, Trading Commodity, Trading Ranges, Wheat
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