As of today (Tuesday 19th May) it’s been a full three months since financial markets went into a spasm as evidence of spread of coronavirus across the globe began to emerge, and the uncertainty over the potential negative health and economic impacts became more acute.
After a tumultuous period it’s worth taking a look back and seeing how far we’ve come. No surprises to see gold prices notching up a healthy 14% increase since the start of the year – the yellow metal has put on a strong performance as economic and political uncertainty has soared and concern that the debasement of fiat was now on steroids.
No prizes for guessing that energy prices – oil, natural gas and fuel – would be down sharply. While US natural gas is down 17% year to date, the benchmark oil futures contracts are down around 50%.
Of course the year to date picture masks massive volatility. Many commodity markets (especially oil and precious metals) sold off sharply during the first couple weeks of March as investors eyed the drop in energy demand and sold off precious metals to meet margin calls elsewhere.
The ideal pandemic hedge has come from a citrus drink that until recently suffered years of declining sales as consumers worried about the impact of teeth decay. Orange juice appears to have regained its status as a natural product to boost their immune systems. Consumers have also resorted to juice as consumers – worried about shortages and being in public places – have stocked up rather than waste real fruit.
Adverse weather in Brazil (one of the major producers) has also supported prices. Despite the rebound in orange juice futures since the start of the year, prices remain 50% below the record high prices achieved in October 2016.
Table: 2020 commodity futures price change – year to date
Related article: Orange juice prices: The top 10 most important drivers