Commodity and ingredient price advances outpace equities in 2010

by Ron Sterk
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KANSAS CITY — Gains in several agricultural commodity and food ingredient prices outpaced major equity indexes, as well as most other major commodities, including crude oil and gold, to end 2010 at the highest levels since the record-setting year of 2008, although there were a few exceptions.

Equities posted solid gains in 2010, with the Standard & Poor’s 500 Index up 13% from the end of 2009, the Dow Jones 30 Industrials average up 11% and the NASDAQ Composite up 17%.

By comparison, the much-watched Standard & Poor’s Goldman Sachs Commodity Index, which includes metals, energy, soft and agricultural commodities, ended up 20% in 2010.

On an individual contract basis, agricultural futures and cash ingredient price advances were impressive.

Nearby March 2011 wheat and corn futures ended 2010 about 50% to 60% above March 2010 contracts at the end of 2009, with Chicago wheat up 47%, Kansas City wheat up 59%, Minneapolis wheat up 62% and Chicago corn up 52%.

Soy complex futures price gains were somewhat more modest with March soybean futures ending 2010 up 34% from a year earlier, soybean meal up 22% and soybean oil up 43%.

The exception was March rice futures that ended down 4% from 2009.

On the ingredient side, flour and vegetable oils posted strong gains in 2010 while dairy and eggs were mixed.

Kansas City bakers’ standard patent was up 42% from the end of 2009, Minneapolis spring standard patent was up 44% and cracker (soft) flour was up 28%. Semolina prices advanced 52% for the year and the cash durum price rose 61%.

Major cash vegetable oil prices gained about 40% to 50% with soybean oil up 50% for the year, corn oil up 46%, canola oil up 41% and palm oil gaining 53%.

In dairy, high-heat nonfat dry milk prices ended the year down 6% and dry whey fell 8%, but butter gained 26%.

Breaking egg prices were 24% lower at the end of the year, although they were extremely volatile during 2010, dried whole egg was up 5%, frozen whole was down 8% and liquid whole was down 21%.

Soft commodity prices were strong in 2010 with 10% to 12% natural cocoa powder up 29% from a year earlier and bulk refined beet and cane sugar up 27%.

Energy prices posted strong but not spectacular gains in 2010. The West Texas intermediate crude oil price gained 15%, the average on-highway retail diesel fuel price was up 21% and the nearby ethanol futures price was 22% higher.

Gold remained a darling of the investment community, with New York spot prices ending about 30% above the final 2009 price.

But gains in nearly every market paled in comparison with silver, which was up about 80% for the year and near two-decade highs, and palladium, which ended up 96.5% at a nine-year high.

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