There seems to be no end to the commodities bull-run. The Reuters-Jefferies CRB index, which tracks 19 heavily-traded commodities, posted a nice gain of +4.8% in October. Keep in mind that came after a sizzling +8.5% pop in September.

All in all, the gains were broad-based in October, with arabica coffee up +11% and corn increasing by +17%. But the standouts were sugar and corn, which both posted +20%-plus gains.

The main fundamental drivers remain intact. Because of adverse weather conditions, there have been lower-yielding crops. At the same time, the lackluster U.S. dollar has been a boost to commodity prices, as they are denominated in dollars.

Investors are also eagerly awaiting the U.S. Federal Reserve’s moves on quantitative easing (QE2), which will pump billions of more dollars in the global economy. [Read: “How The Fed Will Affect Your Portfolio This Week”] This could mean even more pressure on the dollar.

But perhaps the most important fundamental driver is growing demand. The fact is that China, India, Brazil and other developing economies continue to consume huge amounts of commodities.

So what should investors do? Despite the big moves, it looks like there is still room to make profits. So let’s take a look at three of the best-performing commodities in October. I’ll also detail how investors can play these commodities directly with exchange-traded funds (ETFs)…

1. Sugar: The key to this commodity is India, which is the biggest importer and the second largest producer of sugar. Because of the price moves, the country is considering limitations on exports so as to rebuild inventories. The result will inevitably be higher prices.

Because of adverse weather, India had a terrible sugar crop. In fact, even Brazil — the world’s biggest producer of sugar — had a production drop of about a third in the past year. At the same time, demand may be increasing from China.

In light of these supply-demand dynamics — which should continue for some time — it looks like prices should go higher. A way to capitalize on this is with the iPath DJ-UBS Sugar Subindex Total Return ETN (NYSE: SGG), which tracks sugar futures.

2. Cotton: In October, cotton reached the highest price since the U.S. Civil War. Just like sugar, this commodity is also experiencing supply disruptions because of bad weather. There have been unusual storms in Texas as well as a cold spell in China and a drought in Russia.

Because of supply concerns, there has been a rush to buy up cotton. After all, the world’s largest exporter, the United States, has already sold much of its crop. The upshot should be continued price increases.

To invest in cotton, you can look at the iPath Cotton (NYSE: BAL) ETF.

3. Copper: This is a key commodity for industrialization and growth, as evidenced by its main use: construction.
No doubt, China has been a driver for demand as it continues its aggressive infrastructure efforts. As seen by the latest economic reports, it looks like the growth story is still strong. China’s purchasing managers’ index rose to a six-month high in October.

But there are even signs that the U.S. is undergoing a manufacturing rebound. True, it may not be in line with its historical levels — but even a small move can make a big difference with copper demand.

On the supply side, copper is certainly tight. After the 2008-2009 global recession, there was a major drop in production and it is going to take some time to get capacity back up.

As should be no surprise, you can invest in copper directly through the iPath Dow Jones UBS Copper Total Return ETN (NYSE: JJC).

Action to Take –> As is the case with any bull market, almost everything goes up — and commodities are no different. Looking out for the next six months, it’s a good bet that cotton, sugar and copper will continue their momentum, possibly with double-digit moves in price increases. Thus, one approach is to buy equal amounts of ETFs across these commodities.

But which one will perform the best? My take is that it will be copper. The reason is because a global recovery has not been fully discounted into the markets yet. Also, there could be supply disruptions, with one possibility being a strike in a major copper exporting country such as Chile.