Fundamentally Speaking

2014 was an interesting year for the markets as they all are.

Highlights include a U.S. dollar that has climbed to nine year highs in the foreign exchange markets, a rather uneventful year for interest rates and new all-time highs in the major stock market indices.

We had the usual vicissitudes in the commodity markets with some up and some down with the energy markets plummeting while cattle futures pushed to record levels for the fifth consecutive year.

For the grain and oilseeds complex, a second year in a row of favorable growing conditions both here and abroad pushed most markets lower with the exception of wheat.

This graphic shows the percent change in a number of markets during 2014 along with the coefficient of variance(CV) figure which is the standard deviation of 2014 price action divided by the 2014 average times 100.

This is a measure of price volatility with higher numbers associated with increased volatility and vice-versa.

The best performing commodity in 2014 was coffee that climbed by 48.2% this year aided by a Brazilian drought.

Extremely profitable fed cattle prices along with the lowest cow and calf inventories in over 60 years buoyed feeder cattle futures as they advanced 30.2% in 2014.

The weakest markets measured by percent change from the start to the end of the year include unleaded gasoline down 46.1% for the year with a 43.8% plunge in the value of crude oil.

With the so called super commodity cycle boom declared over, the precious metals complex continued to fizzle with gold not only down for the year but having the lowest CV number at 3.99, reflecting diminished speculative interest in this market.

The cocoa and lumber markets also had very low levels of price volatility this past year. On the other hand, elevated levels of price volatility were seen in the cotton, soybean, unleaded gasoline and ethanol markets.

For reference, the S&P 500 futures climbed 14.2% for the year while the U.S. dollar index advanced by a 12.1% rate in 2014.

(KA)