Rollercoaster ride for commodities in June
By Norbert Rucker, Julius Baer
June was a rollercoaster ride for the commodity asset class. Benchmark indices such as the Bloomberg Commodity Index ended the month almost flat with prices selling off in the first half and rebounding strongly in the second half. The driving elements were oil and agricultural commodities while the metals segment overall mostly followed the US dollar swings. North American spring wheat prices surged on the back of weather concerns, pulling the grains segment up in their slipstream. Drought conditions across large parts of the northern Great Plains threaten production. That said, spring wheat is a small crop and agricultural markets more generally are still characterised by ample supplies following several years of bumper harvests. Today’s release of the official US weekly crop conditions report will likely be followed more closely than usual by market observers. Besides the spot price moves, upward sloping futures curves and related roll losses continued to erode the investment performance. With prices expected to trend sideways, commodities should continue to underperform equities and bonds.
The commodity asset class experienced a rollercoaster ride in June with an early sell-off followed by a sharp rebound. Oil and grains were the driving elements.