Commodities Rise to Nine-Month HIgh on Iraq Tumult

Commodities rose to a nine-month high as turmoil in Iraq, OPEC’s second-biggest producer, boosted crude oil, while livestock futures surged on supply concerns.

The Standard & Poor’s GSCI Spot Index of 24 raw materials gained 0.3 percent to settle 660.46 at 3:45 p.m. New York time after reaching 664.81, the highest since Aug. 29. This week, the measure increased 2.1 percent, the biggest gain since Dec. 20.

Islamic fighters extended their advance in Iraq, spurring concern of a return to civil war. Hog futures approached an all-time high after a deadly virus killed scores of piglets, and cattle prices rose to a record with U.S. inventory at the start of the year at the smallest since 1951. A Brazil drought in the first quarter has boosted sugar and coffee costs.

“The situation in Iraq and the weather patterns have been the main drivers for commodities,” Fain Shaffer, the president of Infinity Trading Corp. in Indianapolis, said in a telephone interview. “The conflicting reports on where the insurgents are and how far south they can go are leading the spike in crude oil.”

The GSCI index has climbed 4.5 percent this year. The MSCI All-Country World Index of equities has advanced 4.1 percent, and the Bloomberg U.S. Treasury Bond Index is up 2.9 percent. The dollar has dropped 0.7 percent against a basket of 10 major currencies.

Obama Options

Iraqi Shiite leaders called on supporters to be ready to take up arms. President Barack Obama said he’s weighing how the U.S. can aid the fight against militants who have seized several northern towns.

On the New York Mercantile Exchange, West Texas Intermediate crude oil reached $107.68 a barrel, an eight-month high. Saudi Arabia is the biggest producer in the Organization of Petroleum Exporting Countries.

“The latest escalation in Iraqi tensions has introduced new event risk for global oil markets,” Michael Lewis, global head of commodities research for Deutsche Bank AG, said yesterday in a note.

Cattle futures on the Chicago Mercantile Exchange jumped as much as 1.6 percent to a record $1.473 a pound. Hogs rose to an 12-week high as meatpackers boosted inventories in anticipation that pork production will drop in July and August, partly because of the porcine epidemic diarrhea virus that has killed about 8 million pigs since the outbreak began in May 2013.

Arabica coffee on ICE Futures U.S. in New York rose for the fourth straight day, the longest rally in two months. Cocoa climbed to the highest since September 2011, and raw sugar posted the third straight weekly gain.

Gold futures in New York climbed for the second straight week as the escalating violence in Iraq boosted demand for the precious metal as a haven. Silver rose for the fifth straight day, the longest rally in almost four months.

This year, coffee has surged 59 percent, the most among GSCI components, followed by hogs at 54 percent and nickel in London at 30 percent.