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Commodities Extend Rally to One-Month High as Crude Oil, Copper, Corn Gain
Commodity prices jumped to the highest level in a month amid signs that the improving economy will boost demand for energy, metals and crops.
The Reuters/Jefferies CRB Index of 19 raw materials rose 1.6 percent to 259.98 in New York. Earlier, the gauge reached 260.51, the highest level since May 14. Crude oil topped $75 a barrel, and copper capped the longest rally in five months. Gold was the only index component to decline.
The dollar tumbled as much as 1.5 percent against a basket of six major currencies, boosting the appeal of raw materials as alternative investments. The euro climbed as European industrial output in April rose more than economists forecast.
“The global economy is recovering,” said Oliver Pursche, a co-portfolio manager of the GMG Defensive Beta Fund, which invests in precious and industrial metals, excluding gold. “There will be bumps, but the chance of double dip is very, very small. The downside was exaggerated, and now people are gradually expecting the economy to look up.”
Crude-oil futures for July delivery gained $1.34, or 1.8 percent, to $75.12 a barrel on the New York Mercantile Exchange.
Copper futures for July delivery rose 8.8 cents, or 3 percent, to $2.992 a pound on the Comex in New York. That marked the fifth straight advance, the longest rally since early January.
“There’s more risk appetite out there,” said Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey. “That’s helping industrial commodities. All the panic and nervousness that we saw surrounding Europe and sovereign debt has subsided, at least for the moment.”
Corn prices climbed, extending the longest rally in two months. Wheat and cattle futures also gained.
‘Capacity Constraints’
“We continue to see demand recovering for key commodities, like crude oil and copper, in both the developed world and emerging markets, particularly China, which could increase the likelihood of future capacity constraints, leaving only higher prices to balance supply and demand,” Andrew Karsh, a co- manager of funds for the Credit Suisse Total Commodity Return Strategy team, said in a report.
Commodities pared gains after Greece’s credit rating was cut four levels to below investment grade by Moody’s Investors Service, which cited the country’s economic “risks.”
To contact the reporters on this story: Elizabeth Campbell in New York at ecampbell14@bloomberg.net; Debarati Roy in New York at droy5@bloomberg.net.
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