By Jared Cummans
This past year has been plagued with volatility, as global instability has put a major damper on commodity markets. Thought the first few months looked promising, the latter 30 day periods were plagued by euro-zone woes and choppy markets. As if commodities weren’t volatile enough to begin with, throwing in shaky markets only exacerbates things. It was a tough year for a number of commodity investors, but that doesn’t mean that it was without its gains. Gold, for example, has had a stellar year compared to most investments, bringing solid gains in portfolios that have been hard pressed to find any breathing room. One of the most interesting statistics to look at on the year is where the money was flowing and which assets saw the most investing activity. Below, we outline the most popular commodities of 2011 to help investors find the most liquid options for the coming year [see also 12 High-Yielding Commodities For 2012].
The following futures are taken from the CME Group with all YTD volumes as of 12/9/2011:
If one were to combine soybean meal, soybean oil, and soybean futures, this commodity would place much higher on this list, but soybean futures alone were enough to grab fifth place. With approximately 41.2 million futures traded on the year, soybean contracts saw a healthy jump of 25.3% from 2010; the most growth of any commodity on this list. Like a number of other agricultural commodities, soybeans had a rough year. Though the futures spiked in August, they quickly tumbled 30% in a matter of weeks. All in all, Soybean prices are down about 15% on the year [see also Invest Like Jim Rogers With These Three Agriculture Stocks].
For how well gold has performed in the past few years, it might come as a shock to see these contracts in just fourth place, but the volatility in some of the other futures gives them an edge in popularity. Performance, however, belongs only to gold, as the precious metal has gained over 15% on the year. As far as the futures activity is concerned, COMEX Gold has seen a YTD volume of 46.3 million, representing a 10.8% growth from the same period last year. As long as gold remains a solid performer, expect to see these contracts as some of the most lucrative opportunities on the market [see also Three Reasons Why Gold Is Overvalued].
3. Natural Gas
Natural gas has always been one of the most volatile trading tools on the market and this was especially true in 2011. The last month alone has seen natural gas feature wild swings due to mild weather patterns and record stockpiles that have pushed futures down into the gutter. Through the majority of the year, these futures have amassed over 70.9 million contracts traded, a 21.7% growth year over year. Though many find themselves getting burned by this vital energy source, the opportunities it presents for gains are simply too hard for many to pass up, and with robust growth predictions, expect natural gas trading to only go up from here.
This result sometimes surprises investors, but corn has long been an investor favorite as far as futures contracts are concerned. Perhaps its popularity comes from its wide use; it is nearly impossible to go a single day without using some corn-based product, whether you realize it or not. And with the U.S. dominating world production of the yellow crop, it gives traders a sense of comfort to trade one of the very few commodities that is dominated by our economy (from the production side that is). Corn futures racked up a volume of 74.9 million with a nice jump of 14.3% from the previous year.
1. Crude Oil
If this was a competition, crude oil would take the gold metal twice. Futures contracts for the fossil fuel are more than double the volume of its nearest competitor. Arguably the most important commodity in the world, crude oil futures saw volumes topping 166 million with a 6.5% growth from 2010. The fossil fuel started off the year with massive growth, only to fall off hard in May. The price of crude has rebounded since bottoming out around $75/barrel, leading it to mediocre gains on the year of about 3%. With crude exhibiting huge daily swings over the past few weeks, look for these futures to stay active not only in the coming weeks, but in all of 2012.
|Commodity||YTD Volume||Percent Change (YoY)|
Overall, when considering the volumes of energy and commodity futures combined, commodity investing on the CME saw a total volume of roughly 550 million, a growth of 25% from the previous year. The jump in activity could be due to a number of reasons, like more volatile investments or simply a better understanding of commodities by traders around the world. Whatever the reason, the commodity market is booming with activity and will likely continue to expand in the coming years as investors grow more comfortable with this vital asset class.
Disclosure: No positions at time of writing.