aiki14
08-22-2008, 01:02 AM
From Bloomberg:
Commodities Rally, Heading for Biggest Weekly Jump Since 1975
By Millie Munshi
Aug. 22 (Bloomberg) -- Commodities headed for their biggest weekly gain in 33 years as oil traded near a three-week high and a weakening dollar revived demand for raw materials as alternative assets.
The Reuters/Jefferies CRB Index of 19 commodities soared 3.7 percent to 405.92 in New York yesterday. A settlement at that level today would mark a 6.2 percent gain for the week, the most since July 1975. The dollar headed for its first weekly decline against the euro since July 11, while oil traded near $121 a barrel after jumping more than $5 yesterday.
A rebound in the CRB and a resumption of the dollar's decline may stall a rout in commodities that has sent the index down 14 percent from a record on July 3. Raw materials priced mostly in dollars often move in the opposite direction of the U.S. currency.
The dollar ``had caused people to sell commodities aggressively, and a lot of that selling became overdone,'' said Chip Hanlon, who helps manage $1.5 billion at Delta Global Advisors in Huntington Beach, California. ``This move may tell us that those downtrends are over. Commodities could continue to rally from here.''
Gold for December delivery gained as much as $2.50, or 0.3 percent, to $841.50 today, after yesterday posting its biggest advance since June. The contract was last at $839.10. Platinum for October delivery traded at $1457.40 an ounce, after jumping 6.6 percent to $1458.80 yesterday, the biggest gain since September 2001.
Every commodity on the CRB except hog futures moved higher yesterday. Nickel jumped 8 percent, cocoa rose 6.8 percent and silver rallied 5.2 percent.
Chinese Demand
Commodities are also gaining on speculation demand will increase from China as the country resumes work at factories and infrastructure projects that were shut or slowed during the Olympics, which end Aug. 24.
``China's demand is very important to the commodity markets,'' Hanlon said. ``Now that they're ready to start bringing back factories that had been idled, I wouldn't be surprised to see demand start to pick up again there. Their long-term outlook for growth and development hasn't changed.''
The CRB has more than doubled since 2001 as demand surged in China, the world's fastest-growing major economy. Mining and oil companies, farmers and other commodity producers have struggled to keep up with rising consumption as harsh weather and labor unrest disrupted supplies.
``Until either a lot of supply comes onstream or the economy collapses, the bull market will continue,'' said investor Jim Rogers, who in April 2006 correctly predicted oil would reach $100 a barrel and gold $1,100 an ounce.
Top Gainers
Yesterday's gains in the CRB were led by nickel futures that rose to their highest price since July 11.
Cocoa climbed the most since November 2004 in New York. The International Cocoa Organization said a global deficit will be twice as large as previously expected, with output trailing demand by 88,000 metric tons in the year through September, up from an earlier forecast of 41,000 tons.
``That news, along with dollar weakness, powered strong early-morning gains,'' Dan Vaught, an analyst for Wachovia Securities LLC in St. Louis, said in a report.
The UBS-Bloomberg Constant Maturity Commodity Index rose 4 percent to settle at 1,509.378 yesterday. A settlement at that price today would mark a 6.9 percent gain this week, the most since the data starts in 1997.
To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net
Commodities Rally, Heading for Biggest Weekly Jump Since 1975
By Millie Munshi
Aug. 22 (Bloomberg) -- Commodities headed for their biggest weekly gain in 33 years as oil traded near a three-week high and a weakening dollar revived demand for raw materials as alternative assets.
The Reuters/Jefferies CRB Index of 19 commodities soared 3.7 percent to 405.92 in New York yesterday. A settlement at that level today would mark a 6.2 percent gain for the week, the most since July 1975. The dollar headed for its first weekly decline against the euro since July 11, while oil traded near $121 a barrel after jumping more than $5 yesterday.
A rebound in the CRB and a resumption of the dollar's decline may stall a rout in commodities that has sent the index down 14 percent from a record on July 3. Raw materials priced mostly in dollars often move in the opposite direction of the U.S. currency.
The dollar ``had caused people to sell commodities aggressively, and a lot of that selling became overdone,'' said Chip Hanlon, who helps manage $1.5 billion at Delta Global Advisors in Huntington Beach, California. ``This move may tell us that those downtrends are over. Commodities could continue to rally from here.''
Gold for December delivery gained as much as $2.50, or 0.3 percent, to $841.50 today, after yesterday posting its biggest advance since June. The contract was last at $839.10. Platinum for October delivery traded at $1457.40 an ounce, after jumping 6.6 percent to $1458.80 yesterday, the biggest gain since September 2001.
Every commodity on the CRB except hog futures moved higher yesterday. Nickel jumped 8 percent, cocoa rose 6.8 percent and silver rallied 5.2 percent.
Chinese Demand
Commodities are also gaining on speculation demand will increase from China as the country resumes work at factories and infrastructure projects that were shut or slowed during the Olympics, which end Aug. 24.
``China's demand is very important to the commodity markets,'' Hanlon said. ``Now that they're ready to start bringing back factories that had been idled, I wouldn't be surprised to see demand start to pick up again there. Their long-term outlook for growth and development hasn't changed.''
The CRB has more than doubled since 2001 as demand surged in China, the world's fastest-growing major economy. Mining and oil companies, farmers and other commodity producers have struggled to keep up with rising consumption as harsh weather and labor unrest disrupted supplies.
``Until either a lot of supply comes onstream or the economy collapses, the bull market will continue,'' said investor Jim Rogers, who in April 2006 correctly predicted oil would reach $100 a barrel and gold $1,100 an ounce.
Top Gainers
Yesterday's gains in the CRB were led by nickel futures that rose to their highest price since July 11.
Cocoa climbed the most since November 2004 in New York. The International Cocoa Organization said a global deficit will be twice as large as previously expected, with output trailing demand by 88,000 metric tons in the year through September, up from an earlier forecast of 41,000 tons.
``That news, along with dollar weakness, powered strong early-morning gains,'' Dan Vaught, an analyst for Wachovia Securities LLC in St. Louis, said in a report.
The UBS-Bloomberg Constant Maturity Commodity Index rose 4 percent to settle at 1,509.378 yesterday. A settlement at that price today would mark a 6.9 percent gain this week, the most since the data starts in 1997.
To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net