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An interesting slideshow here via CNBC.com showing the 10 best performing commodities year to date; what I like about this is it shows not just the physical commodity, but the ETF that most closely links to said commodity - and the difference in performance between the physical and ETF.

Keep in mind some ETFs are quite imperfect, and there has been a lot of fuss about the Natural Gas ETF (NYSEARCA:UNG) which some believe is now getting so big it is actually moving the physical market. There was somewhat similar problems last year in the most popular agriculture ETF [Mar 4, 2008: IndexUniverse.com - DBA is "Full-Up"]. I am all for "innovation" but when we start creating Frankenstein products which affect normal supply and demand, it appears we've gone too far. Oh well, all products are now just here to be speculated on and make "mad money" - supply and demand is so 1980s. [Feb 12, 2008: Wheat is Being Ruined by ... what else... Hedge Funds and Speculators]

In this new world order of investing where ETFs are becoming more dominant over individual stocks there are now ETFs even for "Walmart suppliers" (I am serious). I am not sure if CNBC picked the highest volume ETF when it shows some categories, because some of these commodities have multiple "me too" ETFs within the category.

On a side note - I am still amazed there is not a corn or wheat ETF when these are two of America's largest crops. You have to go to England for ETFs that cater only to one or the other. [Jun 16, 2008: Corn Rocks, but We're Frozen Out], [Feb 8, 2008: Wheat is the new Corn] I mentioned coffee shortages in a greenfaucet post I did close to 2 months ago - a few speculative coffee related small caps have been among the daytrader' favorites these past 6-8 weeks.

If my theory (shared by some others) of "inflation in what you need, but deflation in what you want" continues on, these will be some of the groups that will show it. As I walk the grocery aisles looking at prices, I see inflation everywhere in "what we need".

  1. Unleaded Gas +79.1%; ETF - United States Gasoline Fund (NYSEARCA:UGA) +66.2%
  2. Copper +56.9%; ETF - Powershares DB Base Metals Fund (NYSEARCA:DBB) +23.9% [this was a poor choice - there is a copper ETF iPath DJ Copper (NYSEARCA:JJC); lazy reporting. The ETF mentioned mixes zinc, copper, and aluminum. That said, most traders simply are using Freeport McMoran Copper & Gold (NYSE:FCX) as the proxy for copper]
  3. Crude Oil +48.3%; ETF - Powershares Dynamic Oil Services (NYSEARCA:PXJ) +34.3% [note to CNBC.com editor, there are far better choices than an Oil Service ETF to reflect crude oil]
  4. Orange Juice +36.6%; ETF - Market Vectors Agribusiness (NYSEARCA:MOO) +30.3% [note, MOO has about as much to do with orange juice as I do with Kim Jong Il; however there is no pure play orange juice ETF] [Sep 7, 2007: This MOO For You? An ETF to Play the Global Agricultural Boom]
  5. Silver YTD +35.6%; ETF - iShares Silver Trust (NYSEARCA:SLV) +38.8%
  6. Sugar YTD +26.1%; ETF - iPath DJ AIG Sugar (NYSEARCA:SGG) +18.9%
  7. Coffee YTD +23.5%; ETF - iPath DJ AIG Coffee (NYSEARCA:JO) +25.5%
  8. Soybeans YTD +20.6%; ETF - Powershares DB Agriculture (NYSEARCA:DBA) +5.9% [note, DBA is a mix of soybeans, wheat, corn, and sugar]
  9. Heating Oil YTD +20.6%; ETF - United States Heating Oil Fund (NYSEARCA:UHN) +18.2%
  10. Nickel YTD +19.2%; ETF - iPath DJ AIG Nickel (NYSEARCA:JJN) +20.1%

If you want to have some real fun, be aware that many of these subsectors of the commodity space have Inverse, Double Long, and Double Short tied to them. Boo Yah - this Casino rocks. [Feb 5, 2008: Ultra, Ultrashort Commodity ETFs Coming]

[Powershares DB Agriculture Fund (DBA) Hits $40 for First Time - Soybeans Now a Shortage]

[Food...Food...Food]

Source: The 10 Hottest Commodities of 2009