A golden year for 3 commodities

In a year when equity indexes couldn’t stop hitting all-time highs and bitcoin finally reached $100,000, you might have missed the asset class that actually took home the gold: commodities.

Commodities may only make up a minuscule portion of many investors’ portfolios, but their gains this year hit harder than “me espresso.”

Here’s how some of the best-performing commodities wrapped up 2024:

• Crazy for cocoa: Your portfolio got a little sweet treat this year if you were invested in chocolate’s main ingredient. Cocoa futures rose a staggering 176% this year as weather conditions triggered by climate change in West Africa contributed to a shortage in production of the crop. And underinvestment in cocoa farms has exacerbated the crisis, according to JPMorgan. “Cocoa is a market where the grower produces a very high-value good but receives a very low share of the actual value chain. As a result, replanting rates of diseased trees are low and West African yields have been more subject to weather impacts,” explained Tracey Allen, an agricultural commodities strategist at JPMorgan, in a recent note. The Hershey Co. forecast flat earnings growth earlier this year due to the commodity’s high price.
• Spilling the beans: Bad news for those of you enjoying your morning joe, but good news for those of you invested in the beverage. The price of coffee hit a 47-year high earlier this month after extreme weather hit Brazil and Vietnam, the world’s two biggest coffee producers. Overall, coffee futures jumped 73% in 2024. The farming crisis has forced coffee companies such as Nestle to raise their prices, and the shortage in supply is coming just as demand for coffee in markets like China is booming more than ever. Talk about a caffeine crash.
• Silver takes the gold: Precious metals proved their worth this year, with gold, copper, and lithium all providing stellar returns. But one outdid them all: Silver, which rose over 27%. Not only is silver used as a hedge against inflation and economic turmoil (of which there was much this year), but it also has practical applications as a necessary component of building the hardware powering artificial intelligence, electric vehicles, solar panels, and other emerging technologies. Sounds like a portfolio silver bullet.

So, did we convince any of you bitcoin isn’t the only path to see triple-digit gains?—LB