The London Metal Exchange announced a new feature for its exchange, giving traders more options than ever. Specifically, the exchange will give traders the ability to hedge aluminum prices, as the commodity continues to rise due to lengthy delivery times that have thrown a wrench in a number of supply chains [for more commodity news and analysis subscribe to our free newsletter].
With the first quarter of 2014 on the books, investors are still digesting a slew of mixed economic reports, as well as looming uncertainty over the crisis in Ukraine. Equity markets have struggled to find a definitive direction so far this year – a vastly different environment from the record-breaking rallies seen at the end of last year. The commodities market also saw a fair amount of activity in Q1, as geopolitical tensions, severe weather, and global economic uncertainty (particularly in China) came into focus. Below, we outline some of the best and worst performing futures from the first quarter of this year [for more commodity news and analysis subscribe to our free newsletter]:
In recent months, investors have turned their attention to one of the largest commodity consumers in the world: China. Many attribute the most recent commodity supercycle as a byproduct of China’s emergence. Subsequently, analysts have pointed to China’s slowdown as one of the biggest contributing factors to the market’s recent decline [for more commodity news and analysis subscribe to our free newsletter].
Though the commodity space has faced significant headwinds over the past year, there have been certain corners of the market that have proven to be worthwhile investments. One such segment has been commodity producer equities – some of which have benefited from the bull run seen in 2013. But for those investors who are still looking for more bang for their buck, we turn to an elite group dubbed the “Dividend Aristocrats.” This select group of companies have increased their annual dividends every year for at least the past 25 years, giving yield-hungry investors a steady stream of current income [for more on commodity dividends subscribe to our free newsletter].
With Alcoa (AA) kicking off earnings season last week, investors will spend the next little while combing through quarterly statements from their favorite commodity firms. Alcoa reported a fourth quarter net loss of $2.3 billion and missed analysts’ EPS estimates. Agribusiness giant Monsanto Company (MON), however, managed to beat the Street’s estimates, posting an 8.6% increase in quarterly profits [for more commodity news and analysis subscribe to our free newsletter].
Last week, we gave investors our first contango report for 2014, noting that precious metals are facing upward curves for the foreseeable future. This week, we’re bringing you the first backwardation report of the year. For those unfamiliar with this term, backwardation is 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 – put simply, it’s the opposite of contango [for more commodity news and analysis subscribe to our free newsletter].
Uncertainty may have been a central theme on Wall Street all year, but when all was said and done, it was undeniable that the bulls prevailed on the equity front. Bears, however, ripped through commodity markets across the board. With taper fears now in the history books and a federal budget deal on the table, it’s no wonder that many are anticipating for the stock market bull to continue its run higher into 2014 [for more commodity futures news and analysis subscribe to our free newsletter].
As 2013 comes to a close, several analysts have already published their predictions for the coming year with most remaining cautiously optimistic about the global economy in 2014. So far this year, however, commodity markets have struggled to stay out of the red, with many analysts speculating that the epic commodity boom seen in recent years is finally over. Though on the equity side, commodity producers have benefited from this year’s bull run, with oil and gas companies in particular logging in double digit gains [for more commodity news and analysis subscribe to our free newsletter].
With 2013 drawing to a close, we’re taking a moment to reflect back on the biggest moves seen by commodity investors over the past year on Wall Street. Overall, it’s undeniable that the commodity market has been largely clouded with uncertainty this year as evidenced by the fact that the S&P GSCI Commodity Index has turned in a negative performance year-to-date compared to the S&P 500′s stellar gains topping 25% [for more commodity news and analysis subscribe to our free newsletter]. China’s slowdown coupled with persistently “easy” monetary policies from major central banks around the globe were the biggest factors in 2013 contributing to investors’ rotation out of the natural resources market and into the appreciating stock market.
Major equity benchmarks continue to rise into uncharted territory as optimism levels remain elevated following the latest “No Taper” decision from the Fed coupled with expectations that monetary policy will remain accommodative for the foreseeable future. Developments in the Middle East have further helped to bolster stocks higher, and crude oil lower, as investors expressed optimism following overnight news of the deal between the United States and five other superpowers that would freeze advancement of Iran’s nuclear program [for more commodity futures news and analysis subscribe to our free newsletter].