February was a good month for commodities exchange traded funds (ETFs) and exchange traded notes (ETNs). Precious metals were used as a hedge against the volatility in the Middle East. Disruptions in supply pushed oil prices higher while severe weather hit the crops of soft commodities.
Silver. Silver is attractive right now as a hedge to inflation and the overall uncertainty of the global economic picture. The recent uprising in Middle East countries has sparked some safe-haven interest in the metal. Silver is also an industrial metal with a wide range of applications. Countries that are continuing to build up infrastructure and urban areas are making big use of the metal. [4 Silver ETFs for Bullish Sentiment.]
- iShares Silver Trust (NYSEArca: SLV), up 20.9%
- ETFS Physical Silver (NYSEArca: SIVR), up 20.9%
- PowerShares DB Silver (NYSEArca: DBS), up 20.8%
- Global X Silver Miners (NYSEArca: SIL). up 20.9%
Cotton. In Australia, severe flooding has devastated a variety of that country’s commodities with the fragile cotton being one of the worst hit. The nation, which is the fourth-largest producer of the crop, will see reduced output of around 4%. China wants more cotton, too. The demand for cotton that is coming from China is growing, as the domestic 30 million bales produced there will not meet the forecasted necessary 47 million bales anticipated. [After a Slip, Cotton ETN Roars Back.]
- iPath DJ AIG Cotton (NYSEArca: BAL), up 19.5%
Oil. Analysts estimate that as many as a million barrels of Libyan oil a day have been removed from world markets in recent days. Investors are aware that more oil production could be disrupted if the unrest spreads to other crucial producing nations, like Algeria. The danger is that if oil prices continue to increase, it could hinder any beginnings of an economic recovery in developed and emerging markets. [Oil ETFs Retreat, But Will It Stick?]
- United States Brent Oil Fund (NYSEArca: BNO), up 10.9%
Coffee. Two-third’s of the world’s supply of coffee comes from just three countries: Brazil, Vietnam and Colombia. Unfavorable weather conditions have impacted production, which has resulted in the depletion of U.S. coffee reserves to the lowest point in a decade. [The Biggest-Moving Agriculture ETFs.]
- iPath Dow Jones AIG Coffee TR Sub-Index ETN (NYSEArca: JO), up 10.4%
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.