We are now halfway through 2014 and as such is a good time to take a look at the overall performance trends across the futures market.
Over the first half of the year, coffee leads the way in the futures market with a nearly 50% gain on the back of historically bad droughts in Brazil in January and February. After a long term downtrend in the coffee market over the last few years it will be interesting how this drought impacts the long-term price of coffee beans. For more on this, check out: Coffee leads the way in the first half of 2014.
For big consumers of mean, like restaurants, the first half of 2014 hasn't brought a lot of comfort with strong price increases in hogs and feeder cattle, which are up 28.2% and 32.5% respectively. Both products are seeing strong consumer demand while facing lower supply levels. For hogs, spring saw lower farrowings as well as a virus that spread through hogs. For cattle, there is an estimated 1.4 billion pounds of less production for 2014 vs. 2013.
On the decline, the biggest decliner in the futures market is the S&P 500 VIX, which is a barometer of volatility in the stock market. The S&P 500, so far this year, is up just over 6% and has been steadily rising over the last few months, which is the driver behind the low volatility in the market and decline in the VIX, down nearly 30%.
Another big decliners are wheat and lumber, which are down 8.1% and 7.9% respectively. In the wheat market, which has seen significant declines in the second quarter, strong international supply levels have led to cooler prices in wheat. For lumber, a colder winter in the U.S. has led to slower starts in the housing sector along with weakened demand in China has led to the decline in lumber.
Here is an overall look at the market: