The 5 Worst Commodities of 2012

This past year has certainly been a volatile one for the commodity space, but the majority of these assets has been able to net a positive return on the year. Lumber and soybeans led the pack, as each appreciated more than 35% for the year. But bringing up the rear are a few commodities who are no strangers to volatility and weak performances. Below, we outline the five worst performing commodities of 2012 to give investors a better idea of how the year shaped up [for more commodity news and analysis subscribe to our free newsletter].

1. Coffee: And so starts a trend that wreaked havoc on soft commodities this year. Coffee was the worst performing hard asset this year, shedding nearly 38% as this popular beverage took a big hit in October. With the majority of coffee beans being produced in emerging markets, investors should keep an eye abroad to see if this asset will be able to make a rebound in 2013.
2. Sugar: The next worst performer also belongs to the softs category, as sugar #16 sank more than 34% on the year. Sugar #11 fared slightly better, but still lost over 17%. Sugar took a similar hit in October but saw its biggest decline of the year between March and April [see also Ultimate Guide To Sugar Investing].
3. Orange Juice: One of the lesser-known commodities made a stir early in the year when it surged based on imports that tested positive for a dangerous fungicide. But OJ was unable to hold on to its impressive rally and ended the year with losses topping 21%.
4. Natural Gas: It seems that NG simply cannot buy a break, as this commodity has been in the doldrums since the 2008 recession. 2012 is set to be one of the warmest years in the history of the United States, which wreaked havoc on the normal demand patterns for this vital energy source. Despite making a 70% rally in the summer, NG still lost 13% on the year. This commodity will be especially important to watch in the next few months as the winter months, if cold enough, can help prices make a jump.
5. Cotton: Yet another soft makes the list, as cocoa was the only soft commodity to escape the year with a positive return. Cotton futures surrendered just under 13% on the year, though investors may want to keep a close eye on this fluffy commodity, as it has been staging a rally for the past two months.

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Disclosure: No positions at time of writing.