Tags: commodities | China | crude | Brazil

Commodities Rise to 2014 High on Supply Concerns, China Imports

Wednesday, 12 Feb 2014 02:20 PM

Commodities climbed to the highest since December as extreme weather fueled supply concerns for crops and energy at a time of rising imports by China, the world’s largest consumer of everything from metals to pork.

The Standard & Poor’s GSCI Spot Index of 24 commodities gained 0.3 percent to 636.4641 at 1:45 p.m. New York time after touching 639.9293, the highest since Dec. 30. Sugar headed for the biggest increase since Jan. 31, while natural gas advanced for a second day. Coffee was also among the biggest gainers, and cocoa reached the highest since 2011.

The driest January since 1954 seared crops in Brazil, the top sugar and coffee producer, while freezing temperatures that have set records across the U.S. Midwest damaged winter wheat and cut energy stockpiles as heating demand rose. China’s imports surged 10 percent, driven by crude oil, iron ore and record shipments of copper, customs data showed today.

“Clearly, a drought in Brazil gives rise to supply concerns,” Adrian Day, the president of Adrian Day Asset Management in Annapolis, Maryland, who oversees about $150 million, said in a telephone interview. “It’s logical that sugar and coffee are leading the pack. The Chinese data is more bullish for the world economy.”

Holdings across commodities tracked by the GSCI index rose for a seventh straight session, to the highest since November.

The GSCI index gauge has rebounded this year after capping the first annual loss since 2008 last year. China’s economy, the world’s second largest, may expand 7.6 percent this year, Helen Zhu, chief China strategist at Goldman Sachs Group Inc. said today. That’s faster than the 7.4 percent median estimate of economists surveyed by Bloomberg.

Crude Supplies

West Texas Intermediate crude climbed to the highest since Oct. 18 after inventories at Cushing, Oklahoma, the delivery point for the futures, shrank by 2.67 million barrels last week.

Raw-sugar futures jumped as much as 3 percent on ICE Futures U.S. in New York, while arabica coffee futures surged as much as 3.1 percent.

Copper futures for March delivery rose 1.3 percent to $3.256 a pound on the Comex in New York, set for the biggest advance since Jan. 10.

This year’s rebound may be short-lived as banks led by Goldman Sachs Group Inc. and Citigroup Inc. say commodities are heading for losses in 2014. Raw materials from copper and corn to sugar and coffee will have supply surpluses this year after a decade-long bull market spurred producers to build new mines, drill more wells and expand planting of crops. The S&P GSCI Enhanced Commodity Index, Goldman’s preferred measure, will drop 3 percent in the next 12 months, the bank said in a Jan. 12 report.

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Commodities climbed to the highest since December as extreme weather fueled supply concerns for crops and energy at a time of rising imports by China, the world's largest consumer of everything from metals to pork.
commodities,China,crude,Brazil
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2014-20-12
Wednesday, 12 Feb 2014 02:20 PM
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