Of all commodities markets in 2017, palladium led the way higher, gaining over 50 percent. The metal is one of the rarest on earth (30 times rarer than gold) and is used primarily in catalytic converters to clean up automobile exhaust.
Demand for palladium has been strong this year, especially after Hurricanes Harvey and Irma wiped out millions of vehicles, prompting heavy auto purchases in September. Continued expansion of automobiles in China and increasing focus on air pollution has helped boost the metal as well.
Despite the rally in palladium, its sister metal platinum has not appreciated, largely due to falling demand for diesel vehicles, where platinum is more heavily used.
In addition to being exceptionally rare, palladium supplies are geographically concentrated, with 75 percent coming from Russia and South Africa alone, making the metal especially susceptible to supply shocks. Labor unrest in South Africa and geopolitical tensions with Russia frequently threaten global access to the metal.
On Thursday, palladium reached a 17-year high at $1,064 per ounce, only to fall sharply on Friday as traders booked profits for the year, selling off their holdings before year-end.
Markets face grain surplus
2017 marked another year of grain surpluses, with near-record global harvests of corn, soybeans, and wheat. Many U.S. farmers saw hearty harvests this year but were disappointed with low prices that ensued.
Fearing that the trend will continue, producers are needing to make a careful plan for next year, managing costs and price risks as they prepare to plant in the spring. For many, the futures and options markets are a vital tool to pre-sell their crop or lock in breakeven levels to allow their operations to weather potential low prices again in 2018.
For livestock producers, the continued low grain prices have been helpful to keep feed prices manageable, allowing them to expand their herds in 2017. As of midday Friday, corn traded for $3.50, while wheat fetched $4.25, and soybeans stood at $9.60 per bushel.
Gift for the stock markets
All year, U.S. stock markets anxiously awaited news from Washington, D.C., keeping a close eye on Congress, the White House, and the Federal Reserve.
Despite a series of high-tension events and turmoil in D.C., stock buyers were satisfied by the end of the year as Congress passed a tax break that largely benefitted corporations. Coupled with ongoing outlooks for relatively low interest rates from the Fed, equity markets climbed, with mini S&P 500 futures reaching an all-time high at 2698.25 on Friday.