The Scorebook: 2024 Commodities PerformanceQuestion: What was the best performing commodity in 2024?
For many of us, the first coming to mind would be Gold. Indeed, gold had a spectacular year driven by geopolitical uncertainty and the central bank reserve buildup. Spot gold hit an all-time-high of $2,788.54 per ounce on October 30, 2024.
However, Gold retreated nearly $200 since due to the diminishing rate-cut prospects. It ends the year at 2606.72, up 28%. Gold has not won the 2024 commodity championship.
• The performance of Precious Metal commodities was mixed. Silver had an annual return of 24.8%, but Platinum was down 4.4%.
• Base Metals were weak overall, with Aluminum gaining 9.6% and Copper up just 3.8%.
Crude Oil was in the spotlight all year long. The ongoing war in the Middle East, a major oil producing region, should have pushed oil prices sky high. On the contrary, WTI spot price closed at $72 per barrel at year end, practically flat for the year.
• The fighting sides of the conflict, Israel, Hamas, Lebanon, Syria, and the Houthis, was not oil producing nations. OPEC+ countries continue to supply the global market without interruption. NYMEX WTI futures price (CL) was up just 5.1% in 2024.
• Other Crude and Refined commodities were worse. Weaker demand pushed RBOB Gasoline down 2.0%, while heating oil lost 6.8%.
On the bright side, the natural gas product suite was a totally different ball game. Unprecedented weather events result in significant supply and demand shocks, and pump huge volatility in the Nat Gas market.
NYMEX Henry Hub Natural Gas Futures hit a 52-week high of $4.20 on December 30th, after a leading weather forecaster came out predicting record-breaking winter storms in the heavily populated Great Plains and Mid-South regions.
• As the storms are still developing, Henry Hub ended the year at $4.01, up 41.2%.
Across the Atlantic Ocean, Europe adapts to clean energy more rapidly than the U.S. It is estimated that up to 44% of the electricity in the EU is produced by renewable energy.
This heavy reliance could create huge problems if the weather does not cooperate. When Germany ran into days with no wind and a clouded sky, its electricity supply dropped by half. This huge supply gap prompted energy companies to turn on gas-fueled backup plants, pushing Nat Gas prices to a record high.
• Dutch Nat Gas contract TTF was up 62.3% in 2024.
For Agricultural commodities, Grains and Oilseeds were losing ground.
• Corn was up 3.1%, while Soybean and Wheat down 22.3% and 11.8%, respectively.
The Meat Department fares much better. Consistent with our grocery shopping experience with ever pricier red meat, Live Cattle went up 23.7%, while Lean Hog gained 12.9% in 2024.
Overall, Natural Gas was the reigning King of Commodity in 2024, with Henry Hub up 42% and the Dutch TTF gaining 62%.
But wait, if Eggs are tradable, you could book even higher profits. According to the USDA price bulletin, Grade A Large Eggs are now selling at $4.90 a dozen on average nationwide, up 359% from $1.06 a year ago!
It’s a pity that CME Egg futures had been delisted since 1981, depriving us a huge trading opportunity. Do you know that the Chicago Mercantile Exchange was originally named Chicago Egg and Butter Board in 1919?
If you have access to China’s futures markets, you could still trade Egg Futures from Dalian Commodity Exchange. The JD contract traded 248,533 contracts last Friday.
Happy Trading.
Disclaimer: The above discussion is my personal view, and not a trading advice.
