As of midday, commodities and the sector’s related exchange traded funds (ETFs) are headed for their best quarter since the middle of last year. What gives?

Last year marked a boom period for commodities, and many of them hit records – most notably, oil and gold. Around the middle of July, however, a deep correction began that never really fully righted itself. But on the last trading day of the first quarter, the Reuters-Jefferies CRB Index, which tracks prices across 19 mostly U.S.-traded commodities is down 6% for the quarter.

This is after losing 25% and 35% in the third and fourth quarters, respectively, last year, reports Reuters. Analysts have some reasons why there’s been a slowdown in the index’s decline:

• The global financial crisis sent investors to seek shelter in safe-haven assets and the dollar, which sent commodities down and made them more expensive; this process could be winding down
• Oil is being propped up by firmer stocks, as well as a modest rebound in the euro against the dollar
• Japan’s copper exports to China are likely to remain robust until May or Jone

Investors are still hyper-sensitive to any weak data, and the wave of news coming this week could spark a sharper drop in commodity prices. Other economies are still experiencing their own troubles, too: for example, in Japan, unemployment is at a three-year high and the country is in its worst recession since World War II.

• iShares GSCI Commodity-Indexed Trust Fund (GSG): down 7% in the last three months; down 13.4% year-to-date

Tags: Asia, Base Metals, China, Commodity ETFs, Copper, Emerging Markets, Energy, Gold, GSG, Industrial Metals, Japan, Oil, Precious Metals