Fed stimulus boosts commodity prices
Sunday, 22 March 2009
LONDON, Mar 21 (AFP): Commodity prices rallied this week as the US Federal Reserve's decision to pump more than a trillion dollars into the ailing American economy weakened the greenback, leaving investors to seek out havens.
"The Fed's decision to move to quantitative easing by signalling that it will begin to purchase government bonds has led to a strong rally in commodity prices," said Lee Hardman, economist at The Bank of Tokyo-Mitsubishi UFJ in London.
The US central bank Wednesday ramped up its battle against the economic crisis by announcing plans to pump another 1.15 trillion dollars into the financial system in a stepped-up effort to spark recovery.
In reaction, investors have sold off the dollar on fears the move will make US assets less attractive. This has benefited raw materials, notably gold, seen as a haven in times of economic troubles.
OIL: Crude oil prices bounced above 52 dollars a barrel this week on the Fed's latest bid to lift the world's biggest energy consuming nation out of recession, traders said.
New York's light sweet crude rallied to 52.25 dollars a barrel-the highest level since November 28 last year-after topping 50 dollars for the first time in four months Thursday.
"A wave of bullish sentiment swept the markets... as various measures announced by the Fed helped to support prices across the commodity markets," Barclays Capital analysts said in a note to clients.
PRECIOUS METALS: Gold rose sharply, in turn lending a boost to sister metal silver.
Silver advanced to 13.65 dollars an ounce from 13.11 dollars. On the London Platinum and Palladium Market, platinum rose to 1,100 dollars an ounce at the late fixing on Friday from 1,048 dollars a week earlier. Palladium gained to 206 dollars an ounce from 198 dollars.
BASE METALS: Base metals prices mainly advanced, with copper striking a four-month high as it briefly bounced back above 4,000 dollars a tonne prior to profit-taking. "The metals were largely bullish... with the weaker dollar the main driving force," said Basemetal.com analyst William Adams.
By Friday on the London Metal Exchange, copper for delivery in three months stood at 3,959 dollars a tonne from 3,690 dollars the previous week.
Three-month aluminium rose to 1,469 dollars a tonne from 1,375 dollars. Three-month lead gained to 1,310 dollars a tonne from 1,240 dollars. Three-month tin fell to 10,257 dollars a tonne from 10,452 dollars. Three-month zinc climbed to 1,254 dollars a tonne from 1,225 dollars. Three-month nickel rallied to 9,961 dollars a tonne from 9,455 dollars.
COCOA: Cocoa prices extended gains. By Friday on LIFFE, London's futures exchange, the price of cocoa for delivery in May increased to 1,921 pounds a tonne from 1,888 pounds a week earlier. On the New York Board of Trade (NYBOT), the May cocoa contract rose to 2,588 dollars a tonne from 2,425 dollars.
COFFEE: Coffee prices rallied. By Friday on LIFFE, Robusta for delivery in May advanced to 1,572 dollars a tonne from 1,560 dollars a week earlier.
On the NYBOT, Arabica for May jumped to 116.55 US cents a pound from 111.30 cents.
GRAINS AND SOYA: Grains and soya prices advanced. "The main driver this week has been the sharp decline of the US dollar," said Doane Advisory Services analyst Bill Nelson. By Friday on the Chicago Board of Trade, maize for delivery in May jumped to 3.96 dollars a bushel from 3.88 dollars the previous week.
May-dated soyabean meal-used in animal feed-rallied to 9.45 dollars from 8.76 dollars. Wheat for May increased to 5.52 dollars a bushel from 5.18 dollars.
SUGAR: Sugar prices struck seven-month highs of 407 pounds a tonne in London. By Friday on LIFFE, the price of a tonne of white sugar for delivery in May grew to 407 pounds from 402 pounds a week earlier. On NYBOT, the price of unrefined sugar for May gained to 13.53 US cents per pound from 13.20 cents.
"The Fed's decision to move to quantitative easing by signalling that it will begin to purchase government bonds has led to a strong rally in commodity prices," said Lee Hardman, economist at The Bank of Tokyo-Mitsubishi UFJ in London.
The US central bank Wednesday ramped up its battle against the economic crisis by announcing plans to pump another 1.15 trillion dollars into the financial system in a stepped-up effort to spark recovery.
In reaction, investors have sold off the dollar on fears the move will make US assets less attractive. This has benefited raw materials, notably gold, seen as a haven in times of economic troubles.
OIL: Crude oil prices bounced above 52 dollars a barrel this week on the Fed's latest bid to lift the world's biggest energy consuming nation out of recession, traders said.
New York's light sweet crude rallied to 52.25 dollars a barrel-the highest level since November 28 last year-after topping 50 dollars for the first time in four months Thursday.
"A wave of bullish sentiment swept the markets... as various measures announced by the Fed helped to support prices across the commodity markets," Barclays Capital analysts said in a note to clients.
PRECIOUS METALS: Gold rose sharply, in turn lending a boost to sister metal silver.
Silver advanced to 13.65 dollars an ounce from 13.11 dollars. On the London Platinum and Palladium Market, platinum rose to 1,100 dollars an ounce at the late fixing on Friday from 1,048 dollars a week earlier. Palladium gained to 206 dollars an ounce from 198 dollars.
BASE METALS: Base metals prices mainly advanced, with copper striking a four-month high as it briefly bounced back above 4,000 dollars a tonne prior to profit-taking. "The metals were largely bullish... with the weaker dollar the main driving force," said Basemetal.com analyst William Adams.
By Friday on the London Metal Exchange, copper for delivery in three months stood at 3,959 dollars a tonne from 3,690 dollars the previous week.
Three-month aluminium rose to 1,469 dollars a tonne from 1,375 dollars. Three-month lead gained to 1,310 dollars a tonne from 1,240 dollars. Three-month tin fell to 10,257 dollars a tonne from 10,452 dollars. Three-month zinc climbed to 1,254 dollars a tonne from 1,225 dollars. Three-month nickel rallied to 9,961 dollars a tonne from 9,455 dollars.
COCOA: Cocoa prices extended gains. By Friday on LIFFE, London's futures exchange, the price of cocoa for delivery in May increased to 1,921 pounds a tonne from 1,888 pounds a week earlier. On the New York Board of Trade (NYBOT), the May cocoa contract rose to 2,588 dollars a tonne from 2,425 dollars.
COFFEE: Coffee prices rallied. By Friday on LIFFE, Robusta for delivery in May advanced to 1,572 dollars a tonne from 1,560 dollars a week earlier.
On the NYBOT, Arabica for May jumped to 116.55 US cents a pound from 111.30 cents.
GRAINS AND SOYA: Grains and soya prices advanced. "The main driver this week has been the sharp decline of the US dollar," said Doane Advisory Services analyst Bill Nelson. By Friday on the Chicago Board of Trade, maize for delivery in May jumped to 3.96 dollars a bushel from 3.88 dollars the previous week.
May-dated soyabean meal-used in animal feed-rallied to 9.45 dollars from 8.76 dollars. Wheat for May increased to 5.52 dollars a bushel from 5.18 dollars.
SUGAR: Sugar prices struck seven-month highs of 407 pounds a tonne in London. By Friday on LIFFE, the price of a tonne of white sugar for delivery in May grew to 407 pounds from 402 pounds a week earlier. On NYBOT, the price of unrefined sugar for May gained to 13.53 US cents per pound from 13.20 cents.