Like other financial markets, the global commodity markets also witnessed a sharp slowdown at the start of last year. However, a rebound later in the year – owing to rising energy prices, a weaker U.S. dollar, higher consumption demand and more – helped push up the overall commodity prices. As global markets continue to heal around the globe, the commodity markets will also continue to rebound, making them a good investment option. If you are also planning to invest in commodities, to help you choose, following are the ten best performing commodities of 2020.
Best Performing Commodities Of 2020
Our list of the ten best performing commodities of 2020 is based on the return generated by the commodities in 2020. The source of the return data is Bloomberg, U.S. Global Investors. Following are the ten best performing commodities of 2020:
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Platinum prices witnessed a rollercoaster ride last year. The commodity hit a two-year high in January, but dropped to a 17-year low in March. However, it recovered in the second half of the year, and by the end of December, it surpassed its previous 2020 high. Increase in investment demand was a major reason driving platinum’s price. Platinum prices gained 21.5% in 2019 after dropping over 14% in 2018.
Wheat prices gained since summer 2000, but they saw a spike last month after Russia, which is the world’s largest exporter, announced export taxes on wheat and grain export quotas. Though some agricultural commodities witnessed reduced demand last year, wheat remained largely unaffected. Wheat prices gained 11% in 2019 and almost 18% in 2018.
Natural Gas (16%)
Natural gas accounts for about a quarter of U.S. energy consumption. At the end of October last year, the natural gas prices spiked to their highest level since Jan. 2019. Seasonal factors, economic factors, as well as oil prices, affect the demand and supply of natural gas, and in turn, its price. The natural gas prices dropped over 25% in 2019 and about 0.4% in 2018.
Like other commodities, nickel prices rebounded sharply after hitting lows in the first quarter due to the lockdown measures from the coronavirus pandemic. A positive for nickel prices is its growing use in the electric vehicle (EV) batteries. Some analysts, however, expect the demand from the battery industry to lag steel demand for some time. Nickel prices gained over 31% in 2019, but dropped over 16% in 2016.
Zinc prices were volatile in 2019, and with coronavirus hitting the global economy hard in March, the prices dropped to their lowest at $1773.50. However, in the second half of 2020, Zinc prices touched their highest point of $2,800, and remained around the same level throughout the year. China is the world’s top zinc producer, followed by Peru. In 2019, Zinc prices dropped by about 9.5%.
Corn markets bottomed in mid-August, but have been on a roll since then. Several factors are driving this rally in the corn prices, but the most significant is the export sales. As of Nov. 2020, total corn export commitments, which is the sum of outstanding sales and export shipments, were 900 million bushels more than the year before. Another significant factor driving corn prices is the poor ending to the 2020 U.S. growing season.
As in the past, the uncertainty last year (due to the coronavirus pandemic) boosted the gold price. Another factor that pushed up the gold price was the rising U.S. debt resulting in weakening confidence in the U.S. dollar. A weaker U.S. dollar makes gold less expensive for other countries. Also, low returns from other assets made gold more attractive, pushing up its demand.
Palladium prices were very volatile toward the end of the first quarter last year due to the coronavirus pandemic. The prices hit an all-time high in February, then dropped to a five-month low a month later. Though the drop was short lived, it was sharp (from $2,614 to $1,522). However, after a rebound in the gold and silver prices, the palladium prices also recovered.
Copper’s outlook remains largely positive owing to a number of factors, such as the green energy revolution, a weak U.S. dollar and a rebounding global economy. China, however, will play a significant role in deciding copper prices going forward. As per the data from the General Administration of Customs, China imported a record 6.68 million tons of copper last year, but its import slowed toward the end of the year.
Silver prices reached new heights in 2020, a level not seen since 2010. One major reason for the rise in silver prices is the massive monetary and fiscal stimulus around the globe, and uncertainty in the global financial markets. A similar trend was seen in 2016 as well, when uncertainty in global markets, due to a Brexit referendum, increased demand for silver. On the other hand, in 2013, silver prices dropped as global markets enjoyed investors’ confidence.