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Commodities Corner
Dec. 10, 2010, 4:19 a.m. EST
View all Commodities Corner "º
"¹ Previous Column
Gold's a veteran; other metals are rising stars
First Take "º
Borders's sad story
By Myra P. Saefong, MarketWatch
TOKYO (MarketWatch) "” Some commodities were a bit more unassuming than others this year, but 2011 could be the year they stand out.
For much of the year, it seemed as if the oil and natural-gas markets faded into the background behind the rally in gold. Hog and cocoa prices were also laggards.
With interest in commodities strengthening, maybe these markets are ready to heat up again.
New research shows that environmental damage from the BP oil spill in the Gulf of Mexico could be significant where it's hardest to find: deep under the Gulf's surface.
"Commodities are a new asset class for the average investor, a place of refuge," said Kevin Kerr, editor of Kerr Commodities Watch. "Investors have been let down by real estate, stocks, bonds "¦ and now want more tangible assets backed by physical "?stuff' they can hold in their hand and say, "?I own this'."
"We are seeing investors flock to commodity resources and we think that pattern will continue and surge in 2011 "” regardless if prices are moving higher or lower," Kerr said.
So certain commodity wallflowers, including cocoa and hogs but especially oil and natural gas, might do well after a relatively ho-hum year.
"The sort of things that break all commodity trends are major structural changes, e.g., global economic recessions/booms or big production discoveries/losses," said Matt Parry, senior consultant at KBC Process Technology Ltd. "I don't see another big economic change altering the commodity markets too much over the next couple of years really because we've just come out (or are coming out) of one."
"But on the supply side, of course, something significant could happen," he said.
Cocoa prices /quotes/comstock/21c!f2:cc\h11 (CO11H 2,887, -123.00, -4.09%) , for example, are trading around 10% lower year to date, but historically speaking they're still trading near their highest levels since 1980, buoyed by political unrest in the Ivory Coast, the world's biggest producer, said Todd Hultman, editor of DailyFutures.com.
/quotes/comstock/21c!f2:cc\h11 CO11H 2,887, -123.00, -4.09% Cocoa's year to date performance
"Many farms are said to be neglected and the younger generation is not excited about a future of labor-intensive farming," he said.
So after posting decent gains in 2009 and taking a break in 2010, cocoa may be ready for even higher prices in 2011, Hultman said.
Hogs were also among the commodity slackers. Lean hog prices have fallen about 5% "from their peak on Sept. 21 with concerns about weak pork demand and heavy slaughter weights," Hultman said.
But "if high corn prices continue to discourage hog producers from expanding, there may be a chance for better hog prices in 2011," he said.
Oil's breakoutOil had also looked to be among the year's commodity slackers, not able to break above $88 a barrel, but it started showing signs early this month that it's awakened from its slumber.
"I'd have to say that looking back through the past year, oil really endured a volatile, yet range-bound, evolution through 2010," said Parry.
"?I'd have to say that looking back through the past year, oil really endured a volatile, yet range-bound, evolution through 2010.'
Matt Parry, KBC Process Technology Ltd.
Prices began the year around $80 and although the market was hit by market-moving news, including the big oil spill in the Gulf of Mexico, prices moved little.
"If 2009 was a year of recovery for crude oil after the financial meltdown of 2008, 2010 was a year of biding time between roughly $75 and $90 while the world's economies tried to mend," said Hultman.
All the while, gold prices /quotes/comstock/21e!f:gc\g11 (GCG11 1,387, -5.90, -0.42%) have consistently hit fresh record levels, cotton /quotes/comstock/21c!f2:ct\h11 (NY11H 136.70, +0.75, +0.55%) touched all-time highs and silver's /quotes/comstock/21e!f1:si\h11 (SIH11 2,869, -12.70, -0.44%) at its highest level in 30 years.
"While the commodity sector in general seems to have enjoyed bull-market conditions, oil prices have dawdled behind, lacking clear direction within a fairly tight $70-$80-per-barrel range, at least until recently when the range "?metamorphosized' up a scale to $80-$90," Parry said.
Page 1Page 2 Add Comment › · Recommend (1) · Post: Alert Email Print More Commodities Corner Dec. 3, 2010 Gold's a veteran; other metals are rising stars Nov. 19, 2010 Volatility to grow as oil trading terrain shifts Nov. 12, 2010 Drilling challenges slowly reshape oil exploration Nov. 5, 2010 Corn prepares for its battle for land Oct. 29, 2010 Cotton outperforms gold, and worries consumers Explore related topics Gas/Utilities Europe ICE COCOA MAR1 Gold - 100 Oz (Comex) ICE COT 2 MAR1 SILVER 5000 MAR1 Comments Screener About Myra SaefongMyra P. Saefong is our assistant global markets editor based in Tokyo. She has been with MarketWatch since 1998 and holds a master's degree in English literature.
First Take Borders's sad storyBorders Group Inc. was punished by the market Friday morning after posting dreadful results and indicating that its future may be in question.
11:48 a.m. Today11:48 a.m. Dec. 10, 2010
Most Popular Most readMost commented The 10 worst states for retirees Hibernating commodities are primed to wake Climate-change funds shift focus from wind, solar U.S. stock futures edge higher; Tenet in focus U.S. trade deficit narrows sharply in October The best laid plans ... House Democrats acting like angry drunks at bar U.S. trade deficit narrows sharply in October House Democrats block vote on tax deal Senate forges ahead on $858 billion tax package Find a Broker Partner Center » MktwSaefong's Latest Tweets"Hibernating commodities are primed to wake http://on.mktw.net/gUC9BW" 4:30 a.m. EST, Dec. 10, 2010 from MktwSaefong
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/quotes/comstock/21c!f2:cc\h11 ICE COCOA MAR1 (CO11H) /marketstate/country/US The market is open3:03:09 pm The market is closed3:03:09 pm $ 2,887 Change -123.00 -4.09% Volume 13,633 Real time quotes var embeddedchart546953190Chart = new EmbeddedChart('#embeddedchart546953190', NormalChartStyleNoDecimals, 190, 90, '1dy', '5mi', null, null, null, 'US:CO11H'); jQuery.data($('#embeddedchart546953190').get(0), 'embeddedchart', embeddedchart546953190Chart); Add to portfolio CO11H Find a Broker Create alert /quotes/comstock/21e!f:gc\g11 Gold - 100 Oz (Comex) (GCG11) /marketstate/country/US The market is open3:03:09 pm The market is closed3:03:09 pm $ 1,387 Change -5.90 -0.42% Volume 123,524 Real time quotes var embeddedchart17698361Chart = new EmbeddedChart('#embeddedchart17698361', NormalChartStyleNoDecimals, 190, 90, '1dy', '5mi', null, null, null, 'US:GCG11'); jQuery.data($('#embeddedchart17698361').get(0), 'embeddedchart', embeddedchart17698361Chart); Add to portfolio GCG11 Find a Broker Create alert /quotes/comstock/21c!f2:ct\h11 ICE COT 2 MAR1 (NY11H) /marketstate/country/US The market is open3:03:09 pm The market is closed3:03:09 pm 136.70 ¢ Change +0.75 +0.55% Volume 16,650 Real time quotes var embeddedchart217839955Chart = new EmbeddedChart('#embeddedchart217839955', NormalChartStyleNoDecimals, 190, 90, '1dy', '5mi', null, null, null, 'US:NY11H'); jQuery.data($('#embeddedchart217839955').get(0), 'embeddedchart', embeddedchart217839955Chart); Add to portfolio NY11H Find a Broker Create alert /quotes/comstock/21e!f1:si\h11 SILVER 5000 MAR1 (SIH11) /marketstate/country/US The market is open3:03:09 pm The market is closed3:03:09 pm 2,869 ¢ Change -12.70 -0.44% Volume 55,014 Real time quotes var embeddedchart829298496Chart = new EmbeddedChart('#embeddedchart829298496', NormalChartStyleNoDecimals, 190, 90, '1dy', '5mi', null, null, null, 'US:SIH11'); jQuery.data($('#embeddedchart829298496').get(0), 'embeddedchart', embeddedchart829298496Chart); Add to portfolio SIH11 Find a Broker Create alert Featured Commentary » Next: Rex NuttingMoney and Power
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