It was a pretty hectic year for agricultural commodities as the summer months wreaked havoc on prices. After the United States endured the hottest 12-month span on record and an abysmal drought, a number of these staple commodities experienced big movements in price and trading volume alike. But now that 2012 is nearing its close, we look back at these funds throughout the course of the year to see which funds outperformed the rest [for more agriculture news and analysis subscribe to our free newsletter].
As 2012 comes to a close, Wall Street begins to look ahead to the coming year and what trends will have the biggest impact on the commodity world. Financial behemoth Citigroup (C) recently came out with an all-encompassing forecast for the next two years for almost every major commodity. Of particular interest was their outlook on ags, as these commodities have been on a wild ride for 2012; one of the hottest summers on record and an extended drought sent futures all over the board [for more agricultural news and analysis subscribe to our free newsletter].
According to the CIA World Fact Book, the United States operates the largest single-country economy in the world. Its gross domestic product for 2011 was estimated at $15.3 trillion, trailing the European Union, which is comprised of 27 different countries, by only $360 billion. China remains in third place, as the developing economy continues to see rapid growth in recent years due to its build out of industrial capacity and its growing class of individual consumers. Growth in the U.S., however, remains subdued below 2%. The global economic slowdown has certainly hampered the nation”s growth, but there still remains a few economic bright spots, namely the advancement of domestic energy production [for more commodity news and analysis subscribe to our free newsletter].
A legume native to Asia, soybeans trace their history far back, long before written records. Over time, the commodity’s applications have evolved tremendously from being considered sacred for its use in crop rotation, to becoming one of the main fixtures in our everyday diets. Today, the crop is best known for its use in the production of numerous foods, including soybean oil, soy meal, various meat and dairy substitutes, as well as animal feed. Soybean production is dominated by the U.S., as the commodity ranks the second most valuable agricultural export, trailing behind only corn [for more soybean news and analysis subscribe to our free newsletter].
When it comes to futures investing, contango and backwardation are two phenomenons that traders should always keep an eye on. Backwardation is simply the process whereby near month futures are more expensive than those expiring further into the future, creating a downward sloping curve for future prices over time [for more commodity futures news and analysis subscribe to our free newsletter].