In a year where equity indexes couldn’t stop hitting all-time highs and Bitcoin finally breached the $100,000 mark, the asset class that truly stole the spotlight was commodities. Amid surging demand, weather crises, and global supply chain challenges, several key commodities delivered stellar performances. Here’s a closer look at the top performers of 2024:
Cocoa: Sweet Gains Amid Supply Woes
Investors with a stake in cocoa futures were rewarded handsomely in 2024, as prices soared by an extraordinary 176%. This surge was driven by adverse weather conditions in West Africa, the world’s largest cocoa-producing region, which caused a significant production shortfall. Compounding the issue was underinvestment in cocoa farms, a trend that industry experts like JPMorgan say has exacerbated the supply crisis. Hershey Co., a leading chocolate manufacturer, felt the pinch, forecasting flat earnings growth earlier this year due to the steep rise in cocoa prices. For investors, however, cocoa proved to be a golden ticket.
Coffee: Brewing Profits as Prices Hit Record Highs
It was a bittersweet year for coffee enthusiasts. While prices for a cup of coffee surged, investors in coffee futures enjoyed substantial gains. Coffee prices hit a 47-year high after extreme weather wreaked havoc in Brazil and Vietnam, the two largest coffee producers. Futures ended the year up 73%. This agricultural crisis has compelled major companies like Nestle to raise prices, adding to consumer woes. Meanwhile, demand for coffee continues to expand, particularly in emerging markets like China, further fueling the rally.
Silver: A Precious Metal’s Renaissance
Precious metals once again demonstrated their resilience and value in uncertain economic times. While gold, copper, and lithium posted impressive returns, silver outshined them all with a gain of over 27%. Silver’s dual role as both an investment hedge and an industrial powerhouse contributed to its success. Beyond its traditional appeal during inflationary periods, silver’s critical role in technologies such as AI hardware, electric vehicles, and solar panels drove demand to new heights.
As 2024 draws to a close, commodities have proven their mettle in a year filled with economic highs and environmental challenges. Whether driven by fundamental supply-demand imbalances, technological advancements, or shifting consumer markets, this asset class delivered unparalleled returns. For investors looking ahead, the question remains: Will 2025 offer similar opportunities in the commodities market, or will other asset classes reclaim the crown?