Special Report

Seven Commodities With Collapsing Prices

3. WTI Crude
> YTD change: -20.0%
> Current price: $78.78 per barrel
> Dec. 31 price: $98.42 per barrel
> 5-yr change: -1.0%

Crude oil futures have fallen by roughly 20% this year. As of November 3, WTI crude was trading at just under $79 per barrel. By comparison, oil ended last year at close to $100 per barrel. The prices of products made from crude oil — including gasoline and home heating oil — have declined as well. The drop in U.S. crude prices has also been matched overseas, with Brent crude futures falling more than 23% this year to under $85 per barrel. In recent years, spot prices for oil have declined 50% from their all-time high, set in 2008.

A recent report from the IEA notes that while there may be some support among OPEC nations to cut production in order to boost oil prices, Saudi Arabia, OPEC’s leading producer, “is indicating it may be prepared to accept a period of lower prices.” Additionally, Goldman Sachs recently issued a research report forecasting oil prices to fall further in 2015, as U.S. shale production lowers the price of oil and OPEC loses some of its pricing power.

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2. Soybeans
> YTD change: -21.6%
> Current price: $10.29 per bushel
> Dec. 31 price: $13.13 per bushel
> 5-yr change: 2.2%

The United States produces and exports more processed soybeans than any other country in the world. Soybeans are widely used, they are the largest source of animal feed and the second largest source of vegetable oil worldwide, according to the USDA. Although prices are up 2.2% over the last five years to $10.29 a bushel recently, in 2012 prices rose to around $17 a bushel and have dropped 22% since January. As with a number of crops, increased production likely accounts for some amount of the price decline for soybeans. The USDA currently forecasts supplies of soybeans to rise 13% in the 2014-2015 season. The USDA also notes that shipping bottlenecks, caused in part by the increase use of trains to transport oil, will also continue to put downward pressure on prices.

1. Cotton
> YTD change: -24.1%
> Current price: 64.25 cents per pound
> Dec. 31 price: 84.64 cents per pound
> 5-yr change: -4.7%

Cotton futures have fallen 24% in the year to date, the largest decline among all commodities reviewed. Over a four-year period, cotton futures dropped over 52%, also by far the largest decline among major commodities over that time frame. Like a number of other agricultural commodities, cotton faced downward pressure from rising production. According to the USDA, total production of cotton in the 2014-2015 season is expected to rise by over 25% from the 2013-2014 season. Prices also face headwinds from China, the world’s leading cotton consumer, which recently announced it would cut cotton imports next year. The stakes are particularly high for the United States, which is currently the world’s largest exporter of the commodity. Imports by China are currently projected to fall nearly by half in the 2014-2015 season, the USDA reports.

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