Commodities Advance to 25-Month High on Demand for Crops, Precious Metals
Nov. 9 (Bloomberg) -- Mark Bristow, chief executive officer of Randgold Resources Ltd., talks about the outlook for gold and the company's plans for expanding in Africa. He speaks with Maryam Nemazee on Bloomberg Television's "Countdown." (Source: Bloomberg)
Commodities extended a rally to a 25- month high as the global appetite for crops outpaced dwindling supplies, and precious metals surged on demand for a haven from slumping currencies.
The Thomson Reuters/Jefferies CRB Index of 19 raw materials rose as much as 1.6 percent to 320.38, the highest level since Oct. 6, 2008. The gauge has jumped 21 percent since Aug. 31, led by cotton, sugar and silver.
Last week, the dollar slumped to the lowest level since December against a basket of major currencies on plans by the Federal Reserve to expand a U.S. stimulus program by buying more debt. The euro fell today amid debt woes in the region, sending gold to a record high. Soybeans and cotton climbed, partly on mounting demand in China.
“The fundamentals for most commodities are very strong, and the global currency situation, not just the dollar but also the yen and sterling and euro, are like pouring gasoline on a fire,” said James Dailey, who manages $145 million at TEAM Financial Asset Management LLC in Harrisburg, Pennsylvania.
The CRB index rose 1.2 percent to settle at 319.11. The UBS Bloomberg Constant Maturity Commodity Index advanced 1.4 percent to 1,588.37. Earlier, the gauge of 26 prices reached 1,603.01, the highest level since June 17, 2008.
Raw sugar extended a rally to a 29-year high on concern that India may cap exports to boost domestic supplies after a smaller-than-expected cane harvest. Soybeans also gained.
After the close of regular trading, silver futures dropped from a 30-year high and gold declined after CME Group Inc.’s Comex unit raised margin requirements.
Sugar
Raw sugar for March delivery rose 1.23 cents, or 3.9 percent, to settle at 33.11 cents a pound on ICE Futures U.S. in New York. Earlier, the price reached 33.32 cents, the highest level for a most-active contract since Jan. 7, 1981. The commodity has gained 23 percent this year.
India, the world’s second-biggest producer, may export 1.5 million to 2 million metric tons, New York-based Commodore Research & Consultancy said yesterday. Flooding in the state of Uttar Pradesh pushed the estimate down from 3.5 million earlier this year, Commodore said.
“Further heavy rains in India are causing analysts to restrict upward production estimates,” Michael McDougall, a senior vice president at Newedge USA, said in a report. “There is a finite amount of time for the Indian harvest to take place.”
Soybeans
Soybean prices rose to a 26-month high after a government report showed increasing demand for shrinking supplies from the U.S., the world’s biggest grower and exporter.
Inventories before next year’s harvest will be 30 percent less than forecast last month, the Department of Agriculture said today. The crop will total a record 3.375 billion bushels, down from 3.408 billion projected in October. The average estimate of 34 analysts surveyed by Bloomberg News was for 3.426 billion bushels. Futures jumped by the exchange limit in Chicago.
“The cut in the soybean crop was a surprise and reduces inventories to a bare minimum,” said Mark Schultz, the chief analyst for Northstar Commodity Investment Co. in Minneapolis. “Demand is growing faster than global production.”
Soybean futures for January delivery rose 54.25 cents, or 4.3 percent, to close at $13.29 a bushel on the Chicago Board of Trade. That marked the biggest gain since Oct. 8, when the USDA last made its monthly forecast. Earlier, the price rose by the CBOT limit of 70 cents to $13.4475, the highest level since Aug. 28, 2008.
Commodities settled as follows:
Precious metals: December gold up $6.90 to $1,410.10 an ounce December silver up $1.474 to $28.906 an ounce January platinum up $38.50 to $1,809.60 an ounce December palladium up $31.75 to $742.65 an ounce
Livestock: December live cattle down 0.2 cent to 98.2 cents a pound January feeder cattle up 1.8 cents to $1.13425 a pound December lean hogs down 0.6 cent to 66.55 cents a pound February pork bellies unchanged at $1.045 a pound
Grains: January soybeans up 54.25 cents to $13.29 a bushel March corn down 9 cents to $5.9025 a bushel December wheat down 14.5 cents to $7.2175 a bushel March oats down 3.5 cents to $3.855 a bushel
Food and Fiber: March coffee up 9.05 cents to $2.1975 a pound March cocoa up $56 to $2,884 a metric ton March cotton up 5 cents to $1.4711 a pound March sugar up 1.23 cents to 33.11 cents a pound January orange juice up 6.25 cents to $1.615 a pound
Energy: December crude oil down 34 cents to $86.72 a barrel December natural gas up 12.2 cents to $4.21 per million British thermal units December heating oil up 0.9 cent to $2.4067 a gallon December gasoline up 0.65 cent to $2.185 a gallon
Others: December copper up 8.65 cents to $4.043 a pound January lumber up 80 cents to $273.80 per 1,000 board feet
To contact the reporter on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
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