Commodities surged during the first six months of 2008 on a combination of rising demand from growing economies including China and India and a huge wave of speculative buying.
But in the second half of the year, futures plunged as major world economies fell into recession and speculators fled the market, hoping to avoid devastating losses.
The performance of crude oil was the most blatant example of what happened to commodities during the past year.
unimaginable
Crude hit US$100 a barrel for the first time on January 2 and then soared over the next six months, hitting a once-unimaginable US$147.27 on July 11. Then the reality of a global economic downturn set in. After skidding to the US$35 level in late December, the February contract for oil closed Wednesday, New Year's Eve, at US$44.60, up $5.57 on the New York Mercantile Exchange, giving it a loss of 53.5 per cent for the year.
Crude is down nearly 70 per cent from its high.
Gold prices completed their eighth-straight annual gain, finishing up $14.30 at US$883.60 on the Nymex, but down from a record US$1,033.90 reached earlier in the year.
Gold began the year at $838, giving it a gain of 5.4 per cent for the year.
The rally in commodities actually began in 2007, as demand from growing economies increased. Early in 2008, agricultural contracts, particularly wheat, also rose on bad weather in growing areas.
Meanwhile, many on Wall Street turned to the commodities market for safety during 2008 as the stock market buckled.
As futures began to rack up gains, hedge funds and other big investors bought heavily, believing prices could only go higher and that this was the market where they could grab hold of some big returns.
But as it became clear that the recession was spreading around the world, stocks and commodities plunged together.
As demand seemed to be waning for raw materials, so did speculators' appetite for commodities; several hedge funds that bought at the top of the market, particularly in oil, ran into trouble and were forced to close.
Patricia Mohr, an economics and commodity market specialist at Scotiabank, called 2008 "a tumultuous one for commodity prices". She said the "shift from boom to bust in many commodities has been the most rapid" the bank has seen in years.
consumer confidence
"A spiraling down in business and consumer confidence, the intensifying credit crunch and a sharp, sudden slowdown in global auto sales and G7 housing have contributed to the rapid deceleration, as has recent data from China indicating a marked deceleration in industrial activity," Mohr said in a report.
The wipe-out in commodities in the final months of the year was at first seen as beneficial because prices for raw materials were cheaper, and some analysts theorised that this could help the economy.
But, demand didn't come back as investors worried about how protracted the recession might be in 2009.
Still, even when there are signs that the world economy is improving, many investors are unlikely to flood into the market as they did in 2008. The billions of dollars lost as speculative buyers fled the market have left many investors humbled.
That will mean markets that are more orderly, perhaps even more sensible, which should help consumers and the overall economy. And there are already some signs of this.
Plunging oil prices have already translated into lower prices at the pump. Gasolene prices bolted to an average of $4.11 a gallon in July, according to AAA, the Oil Price Information Service and Wright Express. That's down from $2.972 a year ago. At year's end, the price had fallen to $1.62.
prices
Food prices, however, are not likely to follow energy in a rapid path downward. Although the prices for grains and other foodstuffs are down, there are many more factors, such as labour and packaging, that go into setting prices on grocery shelves.
Grain prices rose again Wednesday on the Chicago Board of Trade.
March wheat futures rose 6 cents to finish at US$6.10 a bushel, leaving wheat down 31 per cent for the year.
March corn futures rose 10 cents to settle at US$4.07 a bushel, a loss of 10.6 per cent for the year.
March soybeans added 27 cents to finish at US$9.80 a bushel, but fell 18.3 per cent over the course of 2008.
March copper futures were unchanged at US$1.3225 a pound on the Nymex, but were down 56.5 per cent for the year, while March silver rose 2 cents to close at US$11 an ounce, down 35.6 per cent for the year.
AP
Closing Prices 2008
Gold US$883.60 up 5.4% for the year
Copper US$1.323 down 56.5% for the year
Wheat US$6.100 down 31% for the year
Corn US$$4.07 down 10.6% for the year
Oil
US$44.60 down 53.5% for the year
Natural Gas US$5.622 down 24.9% for the year
Ethanol
US$1.649 down 27% for the year