Commodities Q2 Wrap Up: Natural Gas At Apex, Lumber At Bottom

Commodities Q2 Wrap Up: Natural Gas At Apex, Lumber At Bottom

With just hours to go before the close of June trading, this quarter’s list of best and worst performing commodities is almost final, and a heads-up before you read on: Some of these aren’t your usual A- or Z-listers in raw materials. At the apex of commodity returns for the quarter sits natural gas. The fuel that powers, cools and heats some 40% of America is up 42% actually for March to June. That was just shy of its 2020 third quarter return of 44%.

At the bottom of the quarterly heap is lumber, which is down 25% for the March to June period. For this month itself, lumber has fallen 40%.

Natural gas aside, many raw materials are at multi-year highs, including cornwheatsoybeans and oil.

The TR/CC CRB Excess Return Index for commodities is up 14% for the quarter and almost 3% for June.

It has been a phenomenal year for commodities in the US and other economies. Raw material prices were depressed for months by the coronavirus pandemic enforced lockdowns, but they have been making a strident recovery as global vaccination drives boost demand. Broken supply chains and other bottlenecks in shipping and logistics are adding to the upward price pressure.

The boom is reminiscent of the last supercycle in commodities, which began around 2000 and lasted until 2014, with China vacuuming up the bulk of the raw materials produced and shipped across the world. Today, the Chinese are again buying mountains of everything from oil to metals and grains.

Back to natural gas—that it had higher gains this quarter than crude oil is not something many may have expected.

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