Traders say uncertain if rebound will last

Commodities rose broadly for the first time in four sessions on Monday as the dollar finally broke from its rally, making raw materials priced in the currency attractive again to users of monies like the euro. Crude oil, copper, gold, wheat and sugar prices closed up about 1 to 2 percent each in New York and Chicago trading.

The 19-commodity Reuters-Jefferies CRB index, which counts on crude as its largest component, settled up about 1.2 percent. It had fallen 2.6 percent through last week, touching four-month lows.

Aside from the weaker dollar, the rebound was aided by factors such as U.S. cold weather and Middle East political tensions, which helped propped up oil prices, and speculative buying ahead of official U.S. crop reports, which lifted grains markets.

"With the weaker dollar today, I think a lot of people may feel like the sell-off last week was over-done," said Matthew Zeman, head of trading at LaSalle Futures Group in Chicago. "We're seeing a nice bounce today, but whether or not it's short-lived is a whole other question."

The dollar drifted down after a three-session rally, but euro stayed at multi-month lows against the U.S. currency as investors remained worried about the fiscal health of euro zone members such as Greece, Portugal and Spain.

In New York, crude oil's benchmark front-month contract settled up 70 cents at $71.89 per barrel. It had fallen to $69.50 on Friday, the lowest since Dec. 15.

Over the past year, oil prices have frequently weakened as the dollar firmed, at times signaling a flight to safer havens by investors. Conversely, crude prices have often risen as the dollar has weakened.

Monday's higher prices for oil came after forecasters predicted that unusually cold weather will settle across key heating fuel consuming regions in the United States this week, in the wake of heavy snow over the weekend, forecasters said. On the political front, the United States and France threatened carefully targeted new sanctions against Iran, which gave instructions on Sunday for the production of higher-grade nuclear reactor fuel.

Copper prices bounced off 3-1/2-month lows amid on bargain hunting and a weaker dollar.

New York's most-actively traded copper for March delivery firmed 5.55 cents, or 1.9 percent, to settle at $2.9130 per lb. In London, benchmark copper for three-month delivery ended at $6,450 a tonne, up from $6,265 from Friday's close.

U.S. gold for April delivery rose $13.40 to finish at $1,066.20 an ounce.

Wheat futures rallied over 2 percent and corn and soybeans rose over 1 percent on a wave of technical short-covering before the release of a monthly U.S. government supply/demand report.

"It's short-covering ... There's little else in here," said veteran cash and futures merchant Paul Haugens, a vice president for Newedge USA.

Chicago-traded wheat for March ended up 10-3/4 cents at $4.84 a bushel.

Prices at 5:22 p.m. CST (2222 GMT)

COMMENTS

View disclaimer

 

responses to this article

Name
Subject
Comment

View disclaimer