HOW COMMODITIES STACKED UP IN 2017

After five consecutive years of declines, commodities managed to post back-to-back annual gains in 2017, as global economic growth improved, and some unexpected factors also provided support.

The rally in commodities like copper began in late 2016, as the election of Donald Trump prompted speculation that the U. S. President would implement significant fiscal stimulus and commodity-intensive infrastructure projects.

“This hasn’t played out as expected but rising Chinese demand appears to have come to the rescue in the second part of the year,” said Michael Hewson, chief market analyst at CMC Markets U.K. While copper led the way among base metals with a 31 per cent year-to-date return as of Dec. 27, high auto demand and tight lumber markets helped make palladium and lumber the best-performing commodities in 2017. Aluminum, zinc, lead and nickel were also big winners in 2017. “Some of the real stars this year were any metals remotely related to electric vehicle batteries: lithium, cobalt, nickel,” said Douglas Porter, chief economist at BMO Capital Markets.

There were, of course, some big losers as well, with orange juice ranking last with a decline of 33 per cent — behind other poor performers like natural gas, sugar and coca. Not only has lower U.S. demand for orange juice hurt the commodity, but investor interest has also waned due to a shrinking citrus crop in Florida.