Commodities Continued to Sizzle in 2010, But What's In Store For 2011?


If 2009 was a recovery year for commodities, 2010 was the year they regained their crown. The Reuters-Jeffries CRB Index jumped 17.44 per cent in 2010.

Combined with 2009’s 24 per cent gain, the CRB has climbed nearly 45 per cent off 2008 lows.

Twelve of the 14 commodities we track were in positive territory in 2010 and nine of them saw gains exceeding 20 per cent.

That’s in stark contrast to the bloodshed of 2008 when gold was the only commodity not in the red.

Periodic Table of Commodity Returns

This updated version of our popular commodities periodic table shows how strong the bounce back has been.

Palladium was the top performer, rising over 96 per cent during 2010. Part of this rise can be attributed to the explosion of auto sales in emerging markets since palladium is a critical component of catalytic converters in cars. Marketwatch reported in December that Johnson Matthey estimates palladium demand to have risen 27 per cent in 2010.

Silver (up 83.21 per cent), corn (up 51.75 per cent) and wheat (up 46.68 per cent) were next in line. Natural gas was the worst performer, falling more than 21 per cent—its third-straight year of declines.

Looking over the past decade, you can see how strong the commodity space has been. Nine of the 14 commodities have averaged a double-digit gain per year since 2001. Silver has been the best performer, averaging a 21 per cent rise each year, but lead (up 18.25 per cent annually) and copper (up 18.1 per cent annually) aren’t far behind.

The past 10 years have been very kind to gold investors. Since 2001, gold has had a positive return each year and has averaged 17.97 per cent a year.

It’s impossible to say whether the bull run can continue in 2011 but we believe that the same critical factors that have carried high commodity prices into this decade remain intact. Demand should continue to rise along with the emerging world and supply for most of these commodities will be hard pressed to keep up.

View the Interactive Version of the Commodities Table

The Reuters/Jefferies CRB Index is an unweighted geometric average of commodity price levels relative to the base year average price. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

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