2013 was undoubtedly a rough year for commodities, particularly for precious metals like gold and silver. There were, however, some bright spots in the space, including cocoa, soybean meal, orange juice, gasoline, and brent. For the coming year, analysts remain rather pessimistic on the broad commodity market. Goldman Sachs analysts have noted: “Last year, we pointed to the ongoing shift in our commodity views, ultimately towards downside price risk. The impact of supply responses to the period of extraordinary price pressure continues to flow through the system.” [For more commodity news and analysis subscribe to our free newsletter].
While the bulls reigned supreme on Wall Street in 2013, bearish pressures kept a lid on commodity prices throughout the entire year as investor rotated out of safe havens and jumped into cyclical equities. Despite the improving economic outlook on the home front, as evidenced by the Federal Reserve’s efforts to start reducing stimulus, demand for natural resources remains lackluster. Worries over China’s slowdown and unfavorable supply conditions remain the key headwinds that will most likely continue to put downward pressures on commodity prices heading into the new year [for more commodity news and analysis subscribe to our free newsletter].
For energy traders, the winter months are some of the most active of the year as demand for commodities like natural gas often skyrockets. With weatherman forecasting this December to be the coldest since 1983, investors could be in for some lucrative plays in the natural gas market. Cold weather has already begun to sweep across the nation, with the Midwest and Northeast–two regions that rely heavily on gas for heating–already experiencing plummeting temperatures since before Thanksgiving [for more commodity news and analysis subscribe to our free newsletter].
As 2013 draws to an end, we take a moment to reflect on the happenings in the commodity world from this past year. All-in-all, it was a tough year for a number of hard assets, as the S&P GSCI Commodity Index struggled to find any momentum, losing approximately 2% for the year. Meanwhile, the S&P 500 has jumped more than 26%, as equities have dominated throughout the year. While the story has been grim for some, there are a handful of commodities that have been able to turn in a solid performance in 2013 [for more commodity news and analysis subscribe to our free newsletter].
Though many day traders base their decisions on technical trends, savvy commodity traders also incorporate factual fundamental reports into their research to ensure that they are on the right side of the trade at all times. For energy traders, the data and outlook provided by the U.S. Energy Information Administration (EIA) are some of the most important reports to follow [for more commodity news and analysis subscribe to our free newsletter].
Though taper talks have dominated the headlines in recent months, investors are once again turning their attention to Washington as Congress struggles to come to a bi-partisan budget agreement. On Tuesday, the U.S. federal government officially shut down after Democrats and Republicans failed to agree on a fiscal budget. And though the government has stressed that all “essential” operations would continue, investors are already feeling the impacts of the shutdown [for more commodity futures news and analysis subscribe to our free newsletter].