BLBG: Oil Climbs to Near Four-Month High, Copper Advances on Dollar
Crude oil advanced to its highest level in almost four months and copper jumped to its highest since November as the dollar dropped against the euro, bolstering demand for commodities as a hedge against inflation.
Soybeans rallied to a level not seen since Feb. 13 on speculation U.S. crop demand may increase as Argentine farmers plan to halt sales to protest against export taxes. Commodities had their biggest weekly gain in more than two months last week on a record plunge in the dollar after the Federal Reserve said it may buy $300 billion of government debt and more mortgage bonds, increasing the supply of the currency.
“Sentiment has definitely improved on the back of the Fed announcement,” said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. “We’re going to need further weakness in the dollar to really establish a base at $50.”
Crude oil for May delivery rose as much as 83 cents, or 1.6 percent, to $52.90 a barrel in after-hours electronic trading on the New York Mercantile Exchange. That was the highest since Dec. 1. Futures traded at $52.25 at 11:05 a.m. in London.
The Standard & Poor’s GSCI spot index of 24 commodities climbed 8.6 percent last week, the most since the week ended Jan. 2. Crude oil jumped 13 percent and copper rose 7.8 percent.
“There’s not much out there that suggests demand is really going to pick up in the near term,” Hassall said. “It will take time to flow through,” and oil may prove vulnerable unless the dollar continues to push lower, he said.
Shares Climb
The dollar fell as low as $1.3736 per euro from $1.3582 late in New York Friday. The currency reached $1.3738 on March 19, the weakest level since Jan. 9.
Commodities gained as European stocks and U.S. futures rose on optimism government stimulus efforts will revive lending and ease the worst global economic slump since the Great Depression. Japan’s economy may need 20 trillion yen ($207 billion) in new stimulus, Finance Minister Kaoru Yosano said.
Copper for three-month delivery jumped as much as 4.6 percent to $4,135 a metric ton on the London Metal Exchange after China’s imports doubled and stockpiles fell, fueling speculation demand in the world’s largest user may be rising. The metal traded at $4,076 a ton at 11:05 a.m. London time.
Imports of refined copper into the world’s third-largest economy jumped 50 percent to 270,948 tons in February from the previous month, according to revised customs data released today. Stockpiles in Shanghai fell 9.6 percent last week to 31,408 metric tons, less than half the level a year ago, according to figures released March 20.
Investments by China
China, also the world’s biggest buyer of metals, may spend more than $500 billion on overseas resources investments over the next eight years to secure supplies to drive economic growth, according to Deloitte Touche Tohmatsu.
“They will capture the low end of the market right now,” Eric Lilford, head of Australia mining for Deloitte Corporate Finance, said in Singapore today. Lilford visited Chinese state- owned companies, private-equity funds and metals producers in Shanghai and Beijing last week.
Soybeans for May delivery added as much as 3.1 percent to $9.8125 a bushel on the Chicago Board of Trade and traded at $9.81 at 11:05 a.m. London time.
Argentine farmers will halt sales of grains, oilseeds and livestock March 21-27 to protest against the government’s farm policies and export taxes, said Mario Llambias, head of the Argentine Rural Confederation March 20. The protests ratchet up the farmers’ battle with President Cristina Fernandez de Kirchner to lower taxes and relax trade limits.
