Commodities rose, capping the biggest weekly gain since October 2009, as global shortfalls of cotton and wheat drove agriculture prices higher.
The Thomson Reuters/Jefferies CRB Index of 19 raw materials rose 4.06, or 1.3 percent, to settle at 316.16, boosting the week’s rally to 5 percent.
Cotton had the biggest weekly jump in 39 years after India put limits on exports. Heavy rain is eroding the quality of Australian wheat after a drought cut Russian grain output. The dollar tumbled against major currencies, boosting the investment appeal of energy, metals and crops. Crude oil rose to a 25-month high, and gold topped $1,400 an ounce.
“The perfect storm in commodities continues another week,” said Fain Shaffer, the president of Infinity Trading Corp., a commodity brokerage in Medford, Oregon. “Between weather problems, financial problems and China saying they want to buy gold, all these markets are up pretty good today.”
The UBS Bloomberg Constant Maturity Commodity Index of 26 prices advanced 1 percent to 1,561.89. This week, the gauge climbed 4.9 percent, the most since July 2009.
The greenback fell the most in six weeks against a basket of six currencies after a U.S. government report showed employers added less than one-third as many jobs last month as economists forecast, and the unemployment rate rose to 9.8 percent, increasing speculation that the recovery is faltering.
Shifts by funds into commodity markets also spurred the rally, said Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey.
Commodities at ‘Forefront’
“There’s a lot of money out there that needs to be invested as we go into year-end,” O’Neill said. “Commodities and gold in particular are at the forefront of that as an asset class.”
Commodity assets under management increased $19 billion to a record $340 billion in October, Barclays Capital said last week.
The CRB index has climbed 20 percent since Aug. 31. In that period, cotton and gold rose to records, silver jumped to a 30-year high and copper advanced to a 30-month peak.
For the third straight day, cotton prices on ICE Futures U.S. rose the most allowed. The March-delivery contract, the most-active, jumped by the limit of 6 cents, or 4.7 percent, to settle at $1.3234 a pound in New York, the biggest gain since July 2009.
Wheat futures for March delivery jumped 30.5 cents, or 4.1 percent, to $7.79 a bushel on the Chicago Board of Trade. This week, the price gained 13 percent, the most since August.
Gold futures for February delivery jumped $16.90, or 1.2 percent, to close at $1,406.20 on the Comex in New York. This week, the metal gained up 3.1 percent, the most since late May. The metal reached a record $1,424.30 on Nov. 9.
“Ongoing economic uncertainty and the possibility of more quantitative easing needed to counter high unemployment and stagnation in an economic recovery are a solid ground for gold investment,” said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland.
China should consider adding to gold reserves to pave the way for internationalization of the yuan, Xia Bin, an adviser to the central bank, said in commentary in the China Business News.
Silver futures for March delivery climbed 69.9 cents, or 2.4 percent, to $29.271 an ounce on the Comex. Earlier, the metal reached $29.37, the highest since March 1980. This week, the price jumped 9.3 percent, the most since January.
Crude-oil futures for January delivery rose $1.19 to $89.19 a barrel on the New York Mercantile Exchange, the highest closing price since Oct. 7, 2008.
“The rally is due to a much lower dollar,” said Hamza Khan, an analyst with Schork Group Inc., a consulting company in Villanova, Pennsylvania. “This is not based on fundamentals.”
Commodities settled as follows:
Precious metals: February gold up $16.90 to $1,406.20 an ounce March silver up 69.9 cents to $29.271 an ounce January platinum up $15.40 to $1,728.50 an ounce March palladium up $6.40 to $770.10 an ounce
Livestock: February live cattle down 0.1 cent to $1.06375 a pound January feeder cattle unchanged at $1.18675 a pound February lean hogs up 0.575 cent to 76.575 cents a pound February pork bellies unchanged at $1.045 a pound
Grains: January soybeans up 20.5 cents to $13.0025 a bushel March corn up 18 cents to $5.735 a bushel March wheat up 30.5 cents to $7.79 a bushel March oats up 6 cents to $3.67 a bushel
Food and Fiber: March coffee up 1.1 cents to $2.048 a pound March cocoa up $67 to $2,935 a metric ton March cotton up 6 cents to $1.3234 a pound March sugar up 1.05 cents to 29.5 cents a pound January orange juice up 1.35 cents to $1.568 a pound
Energy: January crude oil up $1.19 to $89.19 a barrel January natural gas up 0.6 cent to $4.349 per million British thermal units January heating oil up 3.28 cents to $2.4874 a gallon January gasoline down 0.32 cent to $2.3521 a gallon
Others: March copper up 2 cents to $3.999 a pound March lumber down $3 to $265 per 1,000 board feet