Commodity volatility is falling

It looked as though there was going to be an increase in commodity volatility in 2013 with gains near the end of the  first quarter, yet here we are in the fourth quarter with a continued decline in volatility in commodity markets. This has been an ongoing trend for five years. Each of the major commodity sectors have also seen the same trend in volatility.

Energy markets have followed the same downtrend. We are at five year lows for energy volatility.

Agricultural markets have been subject to greater spikes in volatility yet have also shown a down-trend for five years.We are off the lows seen earlier in the year, but 2013 will have the lowest yearly volatility relative to the last five years.

Industrial metals have been subject to sharp spikes with the same long-term down trend in volatility.2013 will see the lowest levels in five years. There is the potential for spikes in volatility but the markets have matched the tapered volatility in global GDP.