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Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: chomolungma who wrote (1566)	11/10/2003 11:11:21 AM
From: Stephen O	Read Replies (1) \| Respond to of 1643

Commodity Prices Reach 6-Month High on Asia Demand, U.S. Growth 2003-11-10 08:56 (New York) Nov. 10 (Bloomberg) -- Global commodities prices are at a six-month high as economic growth boosts demand in Asian countries such as China and optimism about an economic recovery in the U.S. strengthens. The CRB/Reuters Futures Price Index of 23 commodities has gained 7 percent this year, taking it to its highest level since Feb. 24 and the second-highest point since May 1997. ``There's strong demand out of Asia and people think an economic recovery is on the way,'' said Andrew Hornig, the chief strategist at F&C Management Ltd., which manages 110 billion euros ($126 billion). He expects the index to extend gains into next year. The U.S. economy, the world's largest, expanded in the third quarter at the fastest rate in almost two decades, increasing the likelihood of an economic revival in Europe. At the same time, forecasts of 8.5 percent Chinese growth this year are prompting a surge in investment and production in China and neighboring countries. Soybean prices have driven much of the CBR index's gains as China buys more soybean to make meal that fattens livestock and drought in the U.S. damages crops. The biggest gainer on the index so far this year is soybean meal, which has jumped 43 percent on the Chicago Board of Trade. Soybean futures have gained 30 percent in the same period, making them the index's third-best performer. Chinese Demand Rising incomes in China, the No. 1 buyer of U.S. soybeans, is pushing up demand for more animal protein just as the U.S. Department of Agriculture expects the smallest crop since 1996 because of dry weather in the Midwest. The index's second-biggest gainer is cattle futures. Prices have surged 28 percent so far this year after the U.S. banned imports of Canadian cattle because of a case of mad cow disease found in Alberta. An expanding U.S. economy and Chinese demand are also behind gains in copper and platinum prices. Last week copper, the fourth-biggest riser on the CRB index, extended a three-year high while platinum, the fifth-best performer, neared the highest price in 23 years amid expectations that global economic growth will spur demand for the metals. The strengthening of commodities prices shouldn't prompt concern about inflation because they were due for a rebound, Hornig said. ``It's not a classic inflation signal because they're starting from too low a base and there is still plenty of capacity,'' he said. --Eleanor Wason in the London newsroom (44-20) 7073-3714, or ewason@bloomberg.net. Editor: King