Commodity Blog

Posts Tagged ‘IMF’

Wheat rose today on speculation that dry weather in Western Europe and in countries near Black Sea would damage output. Wheat is heading for the sixth consecutive gain. September futures for wheat delivery gained $0.0115 (0.2 percent) to $5.3175 per bushel by 10:06 on CBoT.

Copper futures dropped in New York, paring previous gains, concerns resurfaced that slower economic growth would damp demand for the industrial metal. The International Monetary Fund stated yesterday that “recent global stability gains are threatened” by the European debt crisis. September futures for copper delivery slid $0.007 (0.2 percent) to $3.008 per pound as of 11:41 on COMEX.

Orange-juice futures dropped on forecast that production in Florida, the second-largest producer in the world, would be bigger than previously expected. The harvest, that ends this month, estimated to be 134 million boxes, compared to the June estimates of 133.6 million. September delivery for orange juice slipped $0.0765 (5.3 percent) to $1.3785 per pound by 13:00 on ICE.

Copper rose today after Giorgos Papakonstantinou, the Minister for Finance of Greece, said that Greece will be provided with an aid package from the European Union and the International Monetary Fund rather soon, easing concerns for EU economy. This announcement has brought some relief to markets, though it hasn’t completely removed doubts about future of the Euro zone.

An expanding global economic recovery coupled with a rising demand from China sparked optimism for a worldwide increase of a copper usage. A gross domestic product in China expected to grow about 8 percent, while an inflation rate predicted to be 3 percent in 2010. Sales of new houses in the U.S. have jumped 27 percent in March, adding to a copper demand in the world’s second biggest consumer of the metal. LME-tracked copper inventories dropped 0.2 percent to 506,125 tons.

Delivery for copper in three months advanced $45 (0.6 percent) to $7,795 per metric ton today on the London Metal Exchange. July futures for copper delivery added $0.0175 (0.5 percent) to $3.548 per pound on NYMEX.

Commodities from oil to copper tend to gain because of the world economy recovery. Commodities jumped 15 percent this year as countries worldwide spur their economies and companies cut investment in mines and oil rigs. The world economy will grow 2.5 percent in 2010 according to the International Monetary Fund. Crude oil increased 60 percent this year to $71.23 per barrel on the New York Mercantile Exchange. The London Metal Exchange index of six metals jumped 67 percent to 2,880.

Crude oil stabilized as U.S. job losses slowed and the unemployment rate dropped. U.S. stockpiles decreased last week as demand rose. The jobless rate dropped to 9.4 percent from 9.5 percent. September delivery for crude oil gained $0.09 to $72.03 per barrel by 11:33 on NYMEX.

The European Central Bank and 18 other banks agreed to a five-year cap on gold sales in attempt to prevent gold dumping. European central banks agreed to sell no more than a combined 400 metric tons of the metal a year through September 2014. As the International Monetary Fund didn’t sign this agreement and have plans to sell 403 tons from its reserves there is possibility that Chinese, Russians or another central bank would buy the 403 tons of IMF gold in one go. Delivery for gold in London dropped 0.8 percent to $955.92 per ounce as of 15:14 local time today.

The IMF has warned the US against pursuing protectionist policies such as a ”buy American” clause inserted into the US stimulus-package legislation, saying such approaches don’t work and would be harmful to the recovery.
Speaking at a briefing on the outlook for Asia, the IMF’s chief-executive, Dominique Strauss-Kahn, said that in crises, the idea of finding a domestic solution was always tempting.
“The problem is with globalisation, even more than previously, it won’t work. The idea is understandable, but really, no one can believe there is a solution in that direction, and we have to explain and explain again that beggar-thy-neighbour policies do not work,” he said.
The Obama Administration faces its first real test on free trade when it confronts moves by both the Senate and the House to insert “buy American” provisions in the stimulus bill.
Virtually every major trading partner of the US — including the EU, Australia, Canada, Japan and China — has warned that such a move could trigger a trade war and would be a breach of international obligations.
Mr Strauss-Kahn also said the idea that Asia had been decoupled from the rest of the world economy had clearly been demonstrated to be false and that it had held up only because of a delay in the way the downturn affected the region.
The IMF is now forecasting 6.8 per cent growth for China in 2009, down from 9 per cent forecast in November. Developing Asia is expected to growth by 5.5 per cent. But Mr Strauss-Kahn stressed there was “a lot of downside risk”.
He said a driver for recovery in Asia would be an upturn in demand in the US and Europe, which are expected to recover somewhat in late 2009 or early 2010. Asia could be expected to recover in 2010, he said.
Mr Strauss-Kahn stressed that there had been early measures by Asian nations to implement countercyclical responses that should help speed Asia’s recovery.