As we have read, a small rise in US petrol consumption got oil investors thinking, ‘Boom, let’s go’ on Thursday and Friday.
Part of this search for a reason to rebound in markets has emerged in commodities.
Continuing talk of a Chinese bounce and new stimulus package got commodity markets eager to get set, but seemingly they ignored the appearance of such a new, big spending plan and focused on continuing Chinese buying in a number of metals and a couple of agricultural commodities.
The Baltic Dry Index went for another run as punters thought: ‘China bounce means more ships’.
It rose Friday for the sixth straight session to the highest in more than four months.
Bloomberg reported that a fund manager, Gresham Investment Management LLC has a record $US1.2 billion committed from investors betting that inflation will send energy, crops and metals higher.
But the most interesting factor in commodities has been the steady buying by China.
It has helped keep copper prices around $US1.50 a pound when they should have been at $US1.20 or less (going on the depths of the slump in the US, Japan, Europe and South Korea for instance).
Now the buying has surfaced in other commodities.
Bloomberg reported Friday night that according to a senior Chinese government official, China’s state reserves have added 26 million to 27 million tonnes of corn and 3.5 million tonnes of soybeans through purchases as part of the government’s effort to lift prices and bolster farm incomes.
Most of this has been domestic purchases, but some buyers offshore say there has been Chinese interest noticed in these agricultural commodities in the past month or so.
China seems to be buoying on the dips when prices fall.
It has also been evident in the cotton market.
Friday’s weakness in the US dollar helped buoy commodities.
In Chicago soybeans rose for the third time in four days and corn rose for the second week in a row.
May soybean futures rose 1.8% to $US8.67 a bushel on the Chicago Board of Trade on Friday. That left prices down marginally (0.6%) over the week.
May corn futures rose 3 USc to $US3.615 a bushel in Chicago. The price added 0.7% for the week, the second increase after seven losing weeks.
Wheat had its best week for a month as the price rose on the weaker dollar and the emerging long dry spell in the southern Great Plains centred on Kansas, possibly Texas and Oklahoma.
It capped the first weekly gain in more than a month, on speculation that a decline in the dollar will spur demand for grain from the US, the world’s largest exporter.
Brazil is looking for non-Argentinean sources of wheat. It will import 3 million tonnes this year. The US, Canada and Russia were mentioned as possible sellers.
Wheat prices are down 14% after last week’s 1.1% rise. May Chicago wheat futures rose 2.3% on Friday to $US5.27 a bushel.
Oil rose to a five-week high on Friday on the weaker greenback and the rise in January petrol use.
Oil climbed 4.4% in New York, despite the gloomy news on US unemployment. It was a sort of ‘flying in the face of reality’ price surge.
April oil futures rose $US1.91 to $US45.52 a barrel on the New York Mercantile Exchange.
Prices ended 1.7% up for the week and are now up 2.1% for 2009 so far.
Crude oil in New York traded at a premium to London’s Brent grade on Friday for the first time since early December as stocks continued to fall at Cushing, Oklahoma, where West Texas Intermediate oil, the US benchmark, is delivered.
April Brent crude in London for April rose $US1.21, or 2.8%, to $US44.85 a barrel on the ICE Futures Europe exchange.
Opec meets on March 15.
Gold finished last week with a two day rise Thursday and Friday, but futures prices finished with hardly any gain for the week overall.
Comex April gold rose $US14.90, or 1.6% Friday to end at $US942.70 an ounce. That was after a 2.3% rise on Thursday. Both days all but wiped out losses earlier in the week.
May silver futures climbed 21.3USc or 1.6% to $US13.333 an ounce: it was up 1.7% over last week.
And the China boomlet story played well in copper (where China has been a steady buyer).
Copper prices rose for the week and on Friday for a second straight weekly gain.
Copper futures prices rose 7.4% last week on speculation that government spending will help boost economic expansion in China and spur demand for the metal.
May Comex copper futures rose 3.55USc, or 2.1%, to $US1.689 a pound.
Copper has risen 20% percent this year.
Helping the tone was a report from Reuters which said that China is ready to buy copper and other industrial metals for reserves.
Reuters cited the government-owned trading company China Minmetals Corp.
Macquarie Bank reckons China’s refined-copper imports may reach 2 million tonnes this year as the State Reserve Bureau adds to inventories.
Copper also rose as stocks monitored by the London Metal Exchange fell for a seventh straight session to 522,025 tonnes.
On the LME, three month copper added $US35, or 0.9%, to $US3,720 a ton or $US1.69 a pound.
