The hottest commodities trade in 2012 What's the hottest trade in commodities for 2012? Most strategists and bankers are talking up the possibility of an oil price spike if political relations between Iran and the west deteriorate further; a sharp rebound in gold prices on the back of fresh eurozone turmoil; or a further collapse in US natural gas prices based on chronic oversupply. But two of the most obscure commodities have already delivered dramatic returns. Just ten days into the new year, anyone who started the year with a trade on the relative performance of orange juice versus Capesize freight would already be up a cool 96 per cent. That's not taking transaction costs into account. The remarkable return of this rather offbeat trade in such a short space of time is a testament to the volatility of commodity markets. In the first ten days of January - only six business days - orange juice futures have risen 26.4 per cent while the Baltic Exchange's index of Capesize freight has fallen 35.7 per cent. It is also a testament to the fact that a strong fundamental story can trump the broad macro malaise that has taken hold of financial markets and pushed them towards ever higher levels of correlation. That is especially true in a small market like orange juice, whose daily notional turnover is just $75m. So when news broke that Brazil, the largest producer of oranges accounting for 38 per cent of global supplies might be temporarily blocked from sales to the US, the price leapt. On the other hand, charter rates for Capesize ships, the largest type of dry bulk carrier used mainly to transport iron ore from Australia or Brazil to China, have been weighed down by chronic oversupply following a boom in rates in 2008. Adding to that, a record 100 ships were waiting to unload outside Chinese ports at the end of 2011. As weather problems fade and Chinese demand begins to tail off ahead of the Lunar New Year, that queue is beginning to ease, increasing availability of ships and so putting downward pressure on rates. Of course, hindsight is a marvellous thing. It's unlikely any fund manager was so prescient as to stake a great deal of money on an orange juice/Capesize relative value trade. For one thing, the two markets are almost entirely unrelated; moreover, few funds or traders are likely to have expertise in both. So, for those who missed the move a couple of weeks ago, is it too late to jump on the long juice/short freight bandwagon? Possibly not. Analysts reckon Capesize rates will remain depressed until after Chinese New Year. As for orange juice, the market closed on Tuesday at the top of its daily trading limit, and there was relatively heavy trading of call options with a $2.30 strike - up 8.5 per cent from Tuesday's close. The hottest trade of 2012 may still have legs.