Goehring and Rozencwajg – Natural Resources Market Overview

From Goehring and Rozencwajg

Commodities were mixed during the fourth quarter. The Goldman Sachs Commodity Index (GSCI), heavily weighted toward energy, fell by a sharp 12%. In contrast, the Rodgers International Commodity Index, weighted more towards metals and agriculture, fell less than 6%.  Natural resource equities were also mixed. With its sizable energy weighting, the S&P North American Natural Resource Stock Index pulled back 1.3% while the S&P Global Natural Resources Stock Index, with its higher metals, forest products, and agriculture weightings, rose 3.5%. Broad equity markets were robust: the MSCI, ACWI and S&P 500 advanced between 11% and 12%.

Commodities and natural resource equities have been trending lower for nearly eighteen months. After peaking in the spring of 2022, the GSCI and Rodgers International Commodity Index fell by 33% and 18%, respectively. Although natural resource equities peaked around the same time, their sell-off has been much milder. The S&P North American and Global Natural Resource Stock Indices are within 5% of their May 2022 highs. We expect to see these indices move higher as commodity market fundamentals get stronger during the year.