Commodities trading might appear to be a relatively new type of investment – but humans have been trading commodities like gold for thousands of years. If you’re looking at different ways to invest to combat high inflation rates amid a current cost-of-living crisis, you might be interested to know what commodities perform the best – and worst.
We break down everything you need to know below.
What are commodities?
Commodity trading refers to a traders who are only interested in investing in tangible substances – like gold, grains, oil and various other crops. The most common commodities are oil and gold but you can trade things like cotton, wheat, corn, coffee, sugar, cattle, silver and even pork bellies!
What are the best-performing commodities so far in 2023?
1) Orange juice
Somewhat surprisingly, orange juice has been the most popular commodity to trade in 2023. At the start of 2020, OJ was priced at just $90/lbs but has now clocked in at a staggering $285/lbs.
One of the biggest reasons for this is falling production in Florida following Hurricane Ian. While Brazil has stepped up their orange production, this is more expensive. So that’s good news for commodity traders!
2) Copper
Next up is copper. While often overlooked in comparison to gold, we simply can’t get enough of this practical material. With copper virtually irreplaceable in most electronics from mobile phones to solar panels, this intense demand means it’s good news for those who’ve invested.
3) Gold
As always, gold remains a ‘safe-haven’ asset. As a tried-and-tested hedge against inflation during times of economic uncertainty (due to the fact it’s not tied to any issuer or government), many people are investing in this precious metal.
And we all know what that means – higher prices!
What are the worst-performing assets of 2023?
On the other end of the spectrum, some assets haven’t performed as admirably. Here are some of the commodities that have traders sitting with their heads in their hands.
1) Coal
Once upon a time, coal was the world’s favourite fossil fuel. But not anymore. With renewable energy sources gaining momentum as the world becomes acutely aware of the downsides of burning fossil fuels, coal has fallen out of fashion.
2) Palladium
While not a rare Earth metal, strictly speaking, palladium is a close relative of platinum and is part of the platinum group.
Its main use is in catalytic converters and the automotive industry. However, with car sales dwindling and people swapping to EVs, it means it’s bad news for palladium traders.
3) Zinc
Finally, another underperformer is zinc. Post Covid-19 it was thought the Chinese demand would be higher than ever. However, this hasn’t been the case, meaning zinc prices have slumped… for now, anyway.
But with all trading, markets can change in an instant. So, it’s not all bad news if you’ve got your hands on some of the worst-performing commodities!