Commodity Prices in Broad Rally
A key measure of commodity prices hit a 24-year high Friday as the bull market in hard assets continued to attract more investors and traders.
The Reuters-CRB index of key commodity futures closed at 300.23, up 0.7% from Thursday and the first time it has topped 300 since April 1981 -- the end of the last raw materials boom a generation ago.
Years of insufficient investment in commodity-supply infrastructure, coupled with surging demand from emerging Asian economies, have fueled predictions that metals, grains, oil and other raw materials are in a sustained period of rising prices.
“These trends may have legs,” said Ron Goodis, director of retail trading at Equidex Brokerage Group in Closter, N.J.
The rebound in oil prices this week, pushing crude futures back above $50 a barrel, helped lift the CRB index. But the 17-commodity index also was bolstered by sharply higher prices for basic metals such as copper and by a big rally in grain prices.
On Friday, March soybean futures in Chicago soared 28.5 cents, or almost 5%, to $5.975 per bushel amid worries about crop losses in rain-short South American soy-growing areas.
A fresh wave of institutional fund money has flowed across commodities markets in recent weeks, analysts say, as investors bet that rising global competition for resources and a decline in the dollar’s value will fuel another year of rising prices.
Many commodities are priced worldwide in dollars. That means they get cheaper for many foreign buyers as the dollar weakens -- an invitation to buy more, for consumption or speculation.
