Focus may be on volatile oil prices right now, but investors shouldn't overlook the strong performance in other commodities, one expert warns.
Ten commodities were in backwardation this month, a sign that markets outside of oil are recovering, according to a recent note from S&P Dow Jones Indices: copper, corn, cocoa, silver, coffee, live cattle, feeder cattle, heating oil, Kansas wheat, and lean hogs.
Backwardation occurs when the present spot price of a commodity is higher than the futures price, typically signaling a surge in demand and shortages in supply.
Jodie Gunzberg, global head of commodities at S&P Dow Jones Indices, called this is a sharp reversal of the trend seen in June through October, where only four commodities were in backwardation, with most sectors on the benchmark S&P GSCI Total Return Index posting losses from June onwards.
However, a look at the index now confirms the turnaround in sectors from their respective bottoms: Agriculture gained nearly 12 percent, livestock rose 6 percent, precious metals are 7 percent higher, and industrial metals recovered 0.6 percent.