By Javier Blas
Published: December 21 2007 20:15 | Last updated: December 21 2007 20:15
Commodities indices in 2007 are set to enjoy their best annual returns in the past five years after the boom in prices for raw materials extended with strong gains for agricultural commodities this week.
Total returns at the S&P GSCI index, the most popular commodity index tracked by about $70bn of funds, are up almost 29 per cent, the highest since the index posted a 32 per cent increase in 2002. The performance is in strong contrast with a 15 per cent decline in 2006.
In Chicago, agricultural commodities surged this week, pulled higher by strong demand from emerging countries and tight supplies. Global inventories for cereals are set to fall to a multi-decade low. Wheat and rice prices hit a record high, soyabean prices soared to a 34-year high while corn prices jumped to an 11-year high.
CBOT March 2008 corn surged on the week by 6.1 per cent to $4.48 a bushel while CBOT January soyabean moved 1.3 per cent higher to $11.73¾ a bushel.
CBOT March wheat rose 1.1 per cent to $9.48¾ a bushel on the week, having jumped briefly to a record high above the $10-a-bushel level. The cereal market was boosted by traders’ concerns that Russia may impose further export tariffs that will limit supply.
Bankers and traders said they expected more investment money to flow into the agricultural arena in early 2008, contributing to higher prices.
Metals prices closed the week higher, posting strong gains on Friday, supported by robust demand from Asian economies. In light trading at the London Metal Exchange, copper rose 4.5 per cent on the week to $6,818 a tonne, recovering from a nine-month low. Aluminium ended the week flat at $1,414 a tonne.
Lead surged 7.2 per cent to $2,647 a tonne while tin rose 2.3 per cent to $16,475 a tonne. Zinc moved 3.1 per cent higher to $2,413 a tonne.
Crude oil prices were volatile on the week amid mixed signals about demand. The US government weather service forecasted a warmer-than-usual winter but traders also pointed out that recent demand indicators have been stronger-than-expected.
Nymex February West Texas Intermediate rose 1.5 per cent to $92.64 a barrel while ICE February Brent lost 0.6 per cent to $92.09 a barrel.
Barclays Capital, one of the most accurate crude oil price forecasters since 2000, upgraded its price forecast for WTI in 2008 to $87.40 a barrel.
Nymex January RBOB gasoline rose 1.7 per cent to $2.3795 a gallon, while Nymex January heating oil moved 0.2 per cent higher to $2.6121 a gallon.
Precious metals surged, with platinum hitting a record high of $1,516 a troy ounce and rising 2.6 per cent on the week to $1,514 an ounce. Spot gold rose 2.0 per cent to $810.4 an ounce.
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