2009: Commodities see biggest gains in 36 yrs
Monday, 4 January 2010
Commodities Thursday sealed their biggest annual gain since the 1973 oil crisis, with most markets lifted by a mix of an unexpectedly quick demand recovery, some supply anxiety and a falling dollar.
The bellwether Reuters/Jefferies CRB index climbed about 24 per cent this year, led by copper and sugar prices that more than doubled, as well as a 78 per cent rise in oil prices and a ninth consecutive yearly gain for gold. The index ended at 283.38, down less than 0.1 per cent from Wednesday's close.
It was the biggest annual growth for the CRB since 1973, when an oil embargo by OPEC and its allies heightened inflationary pressures in the West and drove commodities up almost 48 per cent on the year.
The rebound in prices after 2008's collapse outperformed most analysts' expectations in a recession year where the weak dollar was the biggest driver for gains, but fundamentals also came to the fore for markets like sugar, which surged 120 per cent after a weak Indian crop left the market in deficit.
Copper led the pack with an annual gains of 140 per cent in a year bookended by unexpectedly robust Chinese demand at the start and a strike in top producer Chile at the end.
Some analysts said commodity investors looking for gains must switch strategies in the coming year from the 2009 method of picking up bargains in markets decimated by the financial meltdown of late 2008.
"2009 was really a value proposition, it was about momentum buying on value, which was buying on cheapness in the market," said Mark Pervan, head of commodity research at ANZ.
"2010 is going to be much more macro driven, more fundamentally driven. You won't see so much influence from the dollar. It will be more closely aligned with supply and demand."
But other analysts predicted bigger gains for 2010.
"The investment flow into commodities is expected to continue at the same kind of pace we saw this year, which leaves them with nowhere to go but the upside," Saxo Bank senior manager Ole Hansen told Reuters in late December.
Analysts said natural gas, corn, wheat and soybeans could see net buying in early January as investors rebalanceportfolios linked to commodity indexes, a ritual that takes place at the start of each year.
US gold futures will make up 9.1 per cent of the Dow Jones UBS Commodity Index in 2010, compared with 7.86 per cent in 2009, according to Dow Jones Indexes/STOXX Ltd.
Gold, which ended the year up about 25 per cent after a record high peak above USD 1,226 in early December, could see inflows if the dollar gives back some of its recent gains, analysts said.
--NEWS CENTER
The bellwether Reuters/Jefferies CRB index climbed about 24 per cent this year, led by copper and sugar prices that more than doubled, as well as a 78 per cent rise in oil prices and a ninth consecutive yearly gain for gold. The index ended at 283.38, down less than 0.1 per cent from Wednesday's close.
It was the biggest annual growth for the CRB since 1973, when an oil embargo by OPEC and its allies heightened inflationary pressures in the West and drove commodities up almost 48 per cent on the year.
The rebound in prices after 2008's collapse outperformed most analysts' expectations in a recession year where the weak dollar was the biggest driver for gains, but fundamentals also came to the fore for markets like sugar, which surged 120 per cent after a weak Indian crop left the market in deficit.
Copper led the pack with an annual gains of 140 per cent in a year bookended by unexpectedly robust Chinese demand at the start and a strike in top producer Chile at the end.
Some analysts said commodity investors looking for gains must switch strategies in the coming year from the 2009 method of picking up bargains in markets decimated by the financial meltdown of late 2008.
"2009 was really a value proposition, it was about momentum buying on value, which was buying on cheapness in the market," said Mark Pervan, head of commodity research at ANZ.
"2010 is going to be much more macro driven, more fundamentally driven. You won't see so much influence from the dollar. It will be more closely aligned with supply and demand."
But other analysts predicted bigger gains for 2010.
"The investment flow into commodities is expected to continue at the same kind of pace we saw this year, which leaves them with nowhere to go but the upside," Saxo Bank senior manager Ole Hansen told Reuters in late December.
Analysts said natural gas, corn, wheat and soybeans could see net buying in early January as investors rebalanceportfolios linked to commodity indexes, a ritual that takes place at the start of each year.
US gold futures will make up 9.1 per cent of the Dow Jones UBS Commodity Index in 2010, compared with 7.86 per cent in 2009, according to Dow Jones Indexes/STOXX Ltd.
Gold, which ended the year up about 25 per cent after a record high peak above USD 1,226 in early December, could see inflows if the dollar gives back some of its recent gains, analysts said.
--NEWS CENTER