Commodities bounce back to best week in 10 months

?€œThe situation is not as bad as feared by many and the market took it as a chance for a short-term recovery,?€ said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. ?€œThe market is becoming more confident about the euro crisis or at least has seen some light at the end of the tunnel on the euro.?€

The Standard & Poor?€™s 500 Index posted its biggest weekly gain since July 2009 as US retail sales beat economists?€™ estimates on optimism policy makers will contain the region?€™s debt crisis, even after Standard & Poor?€™s cut Spain?€™s credit rating for the third time in three years. Officials are discussing an expansion of the International Monetary Fund?€™s firepower, IMF and G-20 officials said.

The euro rose 0.8 per cent versus the dollar as of 4:35 p.m. in New York, extending its biggest weekly advance since January on speculation Europe?€™s sovereign debt crisis will be contained as G-20 finance ministers met to confront the turmoil. A weaker dollar boosts the appeal of commodities as an alternative investment.

The S&P GSCI index increased 2.4 per cent to 637.90 today in New York. Commodity prices have rebounded 7.9 per cent after tumbling 12 per cent in the three months ended Sept. 30.

?€˜Improved sentiment?€™

?€œEuropean policy responses appear to have improved sentiment,?€ said Aakash Doshi, a commodity strategist at Citi Global Markets in New York.

?€œAfter a sharp sell-off in the back half of August and throughout September, what you?€™re really seeing is buying on bouts of weakness and a market that?€™s really hungry for green shoots and positive news.?€

Natural gas futures rose in New York, capping the first weekly gain in more than a month on forecasts of colder-than- normal weather that may increase demand for the heating fuel.

Natural gas for November delivery climbed 17.2 cents, or 4.9 per cent, to settle at $US3.703 per million British thermal units on the New York Mercantile Exchange. The futures gained 6.4 per cent this week.

?€œThe cold is going to cover most of the eastern third of the US, and that?€™s where the consumption of natural gas is,?€ said Gordy Elliott, a risk-management specialist at INTL FC Stone Inc. in St. Louis Park, Minnesota. ?€œIt may be the first real heating demand for many areas.?€

Oil rises

Crude for November delivery climbed 3.1 per cent to $US86.80 a barrel on the Nymex, the highest settlement since Sept. 20. Prices advanced on the G-20 talks and as US retail sales climbed.

Retail sales rose in September by the most in seven months, showing American consumers are helping the world?€™s largest economy fend off a slump. Purchases grew 1.1 per cent, exceeding the median forecast of economists surveyed by Bloomberg News, Commerce Department data showed today in Washington.

Gasoil for December delivery jumped 3.2 per cent to settle at $US939.50 a ton on ICE Futures Europe.

?€œIt?€™s really a case of risk on and risk off,?€ said Kyle Cooper, director of research for IAF Advisors in Houston. ?€œThe sentiment shifts quickly and today it?€™s for increased risk.?€

Sugar rallied for a third straight day in New York, settling at a seven-week high as rains delay cane crushing in India, the world?€™s second-largest grower, amid signs of a pick- up in demand.

Sugar gains

Raw sugar for March delivery rose 3.8 per cent to 27.93 cents a pound on ICE Futures US in New York. The commodity was up 11 per cent for the week, the biggest weekly gain in almost two months.

Copper for three-month delivery gained 3.2 per cent to $US7,545 a metric ton on the London Metal Exchange after customs figures yesterday showed imports of the metal into top global consumer China reached a 16-month high.

?€œA key dynamic in the fourth quarter will be the likely surge in refined copper imports to China,?€ Julien Garran, a UBS AG analyst, said in a report today. ?€œChina is desperately short the red metal.?€

Stockpiles of copper monitored by the LME fell for a second week to the lowest level since April on declines in South Korea and Malaysia, the locations closest to China.

Chinese inflation

China?€™s inflation exceeded 6 per cent for a fourth month, limiting the government?€™s ability to ease monetary policy as a weakening global recovery threatens growth. Consumer prices increased 6.1 per cent in September from a year earlier, the National Bureau of Statistics said today. That matched the median forecast in a Bloomberg News survey of 22 economists and followed a 6.2 per cent gain in August.

?€œInflation pressure is likely to decrease over the coming months,?€ Commerzbank?€™s Weinberg said. ?€œFurther tightening measures by the Chinese government and the central bank become unlikely.?€

Silver for December delivery rose 1.6 per cent to settle at $US32.173 an ounce on the Comex in New York.

Wheat for December delivery advanced 0.8 per cent to $US6.2275 a bushel on the Chicago Board of Trade. The grain gained 2.5 per cent this week as rising corn prices make wheat a more attractive source of feed for cattle, hogs and poultry.

?€œEven though cheap Black Sea wheat is bearish, corn prices continue to give support to wheat,?€ said Erin FitzPatrick, an analyst at Rabobank International in London.

Bloomberg

Authors: Commodities - Yahoo! News Search Results

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