In Commodity News 02/06/2015
Corn, oil, gold and other commodities may see some hefty returns this year thanks to El Niño, according to S&P Dow Jones Indices.
On average, the agriculture, energy, metals, livestock and metals sectors, which include corn oil and gold — among many other commodities — all have positive returns in the 12 months following the last nine El Niño weather-event periods, Jodie Gunzberg, global head of commodities at S&P Dow Jones Indices, wrote in a blog.
A table published along with her blog shows that on average for the nine weather-event occurrences, the S&P GSCI Precious Metals index had a positive return of 12.4%, while S&P GSCI Agriculture had a return of 24.38% and S&P GSCI Energy saw a return of 16.2%.
The consistency in temperature increases caused by El Niño hasn’t been enough to shift growing season, so it’s “more destructive to crops in general than helpful, and may disrupt the global food market,” said Gunzberg.
But the “global food market is not the only market that may get disrupted,” she said, noting again that all sectors have positive returns, on average, in the 12 months following the El Niño periods.
And, as Gunzberg pointed out, commodity-sector returns have actually increased over time in each of the 12 months following a temperature rise from an El Niño weather event since the El Niño of 1982 to 1983.
“This El Niño may be just another potential boost with a little more octane…that can act as a catalyst for commodities,” said Gunzberg.
