The agriculture sector has rallied strongly on weather worries and strong export demand, metals have once again been gulped up by China while the energy sector has started to gear up for a post-pandemic recovery in global fuel demand. Precious and semi-precious metals have seen increased demand as a protection against policy mistakes and reflation risks. The impact on the futures forward curves can be seen in the table above.
One year ago the cost of holding (and rolling) a futures position in corn, sugar, soybeans, soy oil and soymeal all cost more than 5% on a 12 month basis. Fast forward to today and these commodities now give a positive carry of between two and more than ten percent. A general improvement has been seen elsewhere with Arabica coffee, gas oil and natural gas still the most expensive to hold from a roll cost perspective.
Looking across 26 of the most traded commodity future, the one year roll has now returned to zero for the first time in more than six years. The charts below show improvements across all three sectors led by agriculture followed by metals, both precious and industrials, and energy. The energy sector especially has seen a sharp improvement since November 9 when the first of several vaccine news helped raise the prospect for a return to normality sometime in 2021.