Tags: Grains | Rally | Gold | New | Record | high

Grains Catch Up with Rally as Gold Hits New Record

Tuesday, 09 Nov 2010 02:48 PM

Soybean prices surged Tuesday, even as other grains faltered, rejoining the runaway commodities rally that saw new highs in many markets on rising expectations for inflation and interest in hard assets.

Gold hit record peaks for a fourth running day and tin matched an all-time high from three weeks ago, partly on bets that the rebound in the dollar will not last and that commodity prices will rise from demand from investors looking for a hedge against inflation.

Soybeans surged to their highest level since September 2008 in Chicago, briefly supporting corn and wheat, after the U.S. Department of Agriculture cut its forecast for the soy crop.

Grains stood aside Monday as most other commodities extended their rally from last week on inflation worries sparked by the Federal Reserve's plan to bolster U.S. economic growth through a new $600 billion stimulus.

"The grains markets kind of started the whole bull market in commodities back in July, so it isn't surprising they have underperformed lately and are catching up now after the revised crop estimates," said Shawn Hackett of Hackett Financial Advisors in Boynton Beach, Florida.

"I think people are reallocating some money to commodities," said Romain Lathiere, fund manager at London's Diapason Commodities Management. "Everybody wants sugar, coffee, base metals, gold and silver as well."

Sugar hit a 30-year peak and arabica coffee 13-1/2-year high. Cotton hit record highs and copper neared an all-time peak from two years ago. Palladium reached 9-year highs while platinum was at its highest since 2008.

The Reuters-Jefferies CRB index of 19 commodities rose more than 1 percent to hit a peak since Oct. 6, 2008.

"Anticipation of inflation, in addition to existing inflation in some countries, has fueled a sharp rally across the board in commodities," said Hou Xinqiang, an analyst at Jinrui Futures.

"We don't see any chance that the United States, euro zone nations, or Japan would pull out of easy monetary policies any time soon, so inflation worries will continue to be a reason for speculative trades."

Three senior Fed officials voiced concerns on Monday about the move boost the U.S. economy through monetary easing, with one warning that the planned $600 billion purchase of government bonds might need to be curbed to temper inflation.

Spot gold was trading around $1,407.90 an ounce in late trade.

December U.S. futures ended up $6.90 at $1,410.10. Palladium rose above $740 an ounce, its highest since April 2001.

There were "lots of good reasons to buy" gold "and not many to sell," said David Thurtell, a London-based precious metals analyst at Citigroup.

"European investors are worried about the euro, real rates are very low and set to stay low for a long time, so the opportunity cost of investing in gold is tiny," Thurtell said.

One other reason for the commodities rally was concern that stockpiles of raw materials could go down faster if physical buying by manufacturers and other end-consumers match the demand seen from financial investors.

"When I look at copper, you have got relatively steady draws on inventories," said Michael Widmer, an analyst at BoA Merrill Lynch.

"Growth may be slowing, but overall the market is not hugely oversupplied for whatever reason — be it because of re-stocking or insufficient supply."

Copper hit its highest levels since July 2008, peaking at above $4.04 a pound in New York futures trade and touching around $8,850 a ton in London.

Soybeans were 4 percent higher and hit a 26-month high of $13.35 a bushel, the biggest gain in a month, after the USDA unexpectedly slashed estimates for crop yields and ending stocks.

Raw sugar rose to a price not seen since 1980, shooting above 33 cents a pound, while Arabica coffee touched a 13-1/2-year high above $2.17 a pound, both in New York.

© 2017 Thomson/Reuters. All rights reserved.

1Like our page
2Share
StreetTalk
Soybean prices surged Tuesday, even as other grains faltered, rejoining the runaway commodities rally that saw new highs in many markets on rising expectations for inflation and interest in hard assets. Gold hit record peaks for a fourth running day and tin matched an...
Grains,Rally,Gold,New,Record,high
629
2010-48-09
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved