The rising dollar and the Federal Reserve’s first interest rate hike of the year sent precious metals and the corresponding ETFs tumbling to end 2016.
However, oil and oil exchange traded products got a lift after the Organization of Petroleum Exporting Countries (OPEC) and other major oil-producing nations opted to lower output.
While a split scenario appears to be afoot for the broader commodities complex to start 2017, some commodities could generate upside for investors this year.
The PowerShares DB Commodity Index Tracking Fund (NYSEArca: DBC), which offers exposure to multiple commodities, was solid last year. Another name in the diversified commodities ETF group to consider is the iShares S&P GSCI Commodity-Indexed Trust (NYSEArca: GSG).
DBC currently features exposure to about 15 commodities. Those include heavily traded commodities such as gold, silver and West Texas Intermediate oil futures, as well as more obscure commodities fare such as sugar, wheat and zinc.
The iPath Bloomberg Coffee Subindex Total Return ETN (NYSEArca: JO) could be a tactical commodities trade for risk-tolerant traders this year. According to the International Coffee Organization, the coffee market saw demand exceed consumption in the two years ended September 30. For instance, Brazilians are likely to consume 3.2% more coffee in 2016, compared to its typical growth rate of about 1%.