Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Market Wisdom

Commodities: 2020 Winners and Losers

The coronavirus, US stimulus payments, and rising unemployment rates have had a strong impact on the markets — but not always in the ways one might expect.

From the supply and demand shock to the oil glut and crash, market carnage has upended expectations and created a new slate of winners and losers. This article will review how select commodities have been impacted by these events.

Of course, market winners and losers are partly defined by your goals and trading position. For example, a long-term investor might have lost considerably on crude oil while a short-term trader, or long-term short, profited.

Orange Juice

By the end of the first quarter, orange juice, with a 30% YTD (year-to-date) increase, had edged out all other commodities including gold. Now, in late June orange juice is still up over 24% YTD.

Orange juice has been enjoying a surge in demand from shoppers seeking to fortify their immune systems with Vitamin C. Consumers looking to make fewer trips to the grocery store stocked up on frozen orange juice in particular, and in the process turned a blind eye to their previous concerns about sugary drinks.

Factoring Impacting Futures

Orange juice futures have been bolstered by adverse weather impacting Brazil’s orange crop. Brazil is the world’s largest producer of oranges.

In addition, Brazilian research association Fundecitrus released a report projecting an 25.6% decline in that country’s 2020-2021’s orange production due to high temperatures and low rainfall. (The season runs May through April.)

Another factor impacting Brazil’s crop is a phenomenon known as “alternate bearing” where a large harvest (like that of 2018-2019) is followed by a smaller one the next year due to there being a lower volume of nutrients left in the soil.

We’re now in hurricane season which runs from June through November. Hurricane watches and warnings can produce volatility in orange juice futures and fuel speculative buying. However, according to futures market analyst Jack Scofield, historically, hurricanes have rarely destroyed orange crops. Speculators often assume otherwise, and may bid up the price during hurricane watches and warnings.

Those interested in trading orange juice should follow Scofield’s commentary, watch for new reports and projections from, and track weather trends carefully. (Unfortunately,’s English-language site publications page is quite outdated. You may need to search for media citations of their latest reports instead.)

Trading Orange Juice

Available opportunities for trading on orange juice are limited to:

  • Futures
  • Options on futures
  • The RICI-Agriculture ETN (which has less than 2% of its holdings in orange juice and is down YTD).
  • CFDs (contracts-for-difference) which are not available in the U.S.

Orange juice futures are based on frozen concentrate.

The primary futures contract in the US is FCOJ-A ( US “Grade A” orange juice) which is sourced from Florida or Brazil. The futures trade on the ICE (Intercontinental Exchange).

There’s also an FCOJ-B contract which has no specified country of origin, and trades only as a “differential contract” in relation to FCOJ-A, i.e., it tracks the difference in price.

Each ICE contract is for 15,000 pounds of concentrate solids which currently cost over a dollar a pound.

  • You can also trade options on these futures. Some recommend long options to avoid the potential losses that can come from trading futures.
  • Investopedia has an interesting take on ratio spreads using options.


Gold is up 15% YTD, just behind the NASDAQ 100 (+16%) and ahead of S&P 500 Technology (+13%). Gold’s YTD gain lags 20+yr US Treasuries— another traditional hedge against inflation — which are up nearly 20% YTD.

In the current quarter, gold gained 10%. Indeed, gold has edged out most other commodities this year.

Some top hedge fund founders and analysts have been trumpeting gold as a hedge against the inflation that they expect to arrive in the wake of trillions in quantitative easing and stimulus spending.

  • As reported by Bloomberg, Paul Singer, Crispin Odey, and David Einhorn are bullish on gold.
  • Bank of America is forecasting an 18-month rise to $3,000 an ounce, noting that “The Fed can’t print gold.”
  • Reuters reports that nine private banks that manage some $6 trillion in assets are channeling a percentage of their clients’ portfolios into gold.
  • Analysts note that negative (and falling) real bond rates are adding to gold’s appeal.

What Do the Contrarians Say?

Contrarians point out that similar positions were taken during the Great Recession, and fund managers never saw the inflation they expected.

They also are watching diminished retail demand for gold in China and India due to contractions in jewelry markets there.

Bitcoin: The New Safe Haven?

In May billionaire Paul Tudor Jones made waves when he announced in a letter to investors that he was placing 1%-2% of assets into Bitcoin (BTC) as a hedge against the “Great Monetary Inflation” or “GMI.” Jones is invested in bitcoin futures (BTCM20) traded on the Chicago Mercantile Exchange (CME).

Calling his position a “great speculation” Jones believes bitcoin could play the role that gold did in the 1970s.

“The most compelling argument for owning Bitcoin is the coming digitization of currency everywhere, accelerated by COVID-19,” Jones says.

Crude Oil, Gasoline, S&P Energy

Oil was hit first by the Russia-Saudi Arabia price wars, and then taken to the mat by the coronavirus lockdowns and futures traders desperate to unload May contracts. That led to the historic plunge of WTI futures into negative territory.

Russia and US shale producers are cooperating on production cuts, which has helped boost prices. In addition, many states are opening up which may result in an increase in demand.
However WTI and Brent have been trading low: in the $20-$40 range.

The US oil and gas sector is highly leveraged and many companies have struggled to make loan payments. So it’s not surprising to see bankruptcies emerging.

Some 18 firms have filed for bankruptcy this year, continuing a years-long trend. According to research from Haynes and Boone 226 US companies have filed for bankruptcy since 2015. These companies account for “more than $132 billion in aggregate debt.”

Some small hedge funds that had been bearish on shale posted significant gains. These include:

  • Saltstone Capital
  • Exo Trading
  • Kalkriese Capital Partners LP

While YTD price changes have only benefited those prescient enough to bet against oil, there has been plenty of rebound action for short-term traders.

Here are some comparisons

 YTDCurrent quarter
Crude oil-34%+97%
S&P 500 Energy-35%+33%

* Above prices are based on The Wall St. Journal tracking of continuous front-month futures contracts, as accessed on June 22, 2020.


Uranium prices soared in April and May — climbing a third over the course of a month and a half, due in part to pandemic-related mine closures in some areas.

Uranium is up 37% YTD.

Uranium futures, which are cash-settled, trade on the Chicago Mercantile Exchange (CME) and ICE (Intercontinental Exchange), but retail investors can gain exposure via companies like:

  • Fission Uranium Corp. (OTCMKTS: FCUUF)
  • Yellow Cake plc (OTCMKTS: YLLXF)
  • Uranium Participation Corp. (OTCMKTS: URPTF)

As always, do thorough research and technical analysis before investing or trading and before deciding to go long or short.


So far 2020 has been unfolding like a thriller on Netflix: at every turn there are unexpected plot twists. The markets have been no different. Bloomberg noted “extreme behavior” including price swings, unusual volume, and marked volatility.

Indeed, the only thing that appears certain is continued uncertainty.

YTD, Q1, and current quarter commodities price changes cited in this article, unless otherwise noted, are based on The Wall St. Journal tracking of continuous front-month futures contracts as measured on June 23,2020.