Metals, crops and fuel beat stocks, bonds and the dollar for a third straight month, the longest stretch since June 2008, as inflation lifted cotton and cocoa and investors speculated violence in the Middle East and northern Africa will restrain energy supplies.
The S&P GSCI Total Return Index of 24 commodities gained 3.8 per cent in February and rose for a sixth consecutive month, the longest streak since 2004, data compiled by Bloomberg show. The MSCI All-Country World Index of equities in 45 nations returned 3 per cent including dividends, while corporate and government bonds rose 0.21 per cent, according to Bank of America Merrill Lynch’s Global Broad Market Index. The U.S. Dollar Index, a gauge of the currency against six counterparts such as the euro and yen, fell 1.1 per cent.
Faster global growth pushed up raw-material prices since September and gains accelerated after riots toppled leaders in Egypt and Tunisia and threatened Libya’s Muammar Gaddafi. At the same time, central banks in emerging economies from China to Russia are raising interest rates and boosting reserve requirements at banks to fight inflation, holding back equities.
“These commodity price increases are staggering,” said Kevin Rendino, a money manager at New York-based BlackRock Inc, which oversees $3.45 trillion. “Each commodity is different, but there is a supply issue for oil. There has been real economic demand for these commodities since the economy began recovering.”
June 2008
The last time commodities beat stocks, bonds and the dollar for three straight months was June 2008, when the price of oil surged following violence in Iraq. Futures reached a record $147.27 a barrel the next month, and the average price for US regular gasoline at the pump also climbed as high as $4.114.
The S&P GSCI index advanced 1.1 per cent at 9:47 am in New York on Tuesday.
Metals gained in February after reports showed Chinese manufacturing expanded and US factory output beat the most optimistic forecast of economists surveyed by Bloomberg. Silver rose 20 per cent last month, the most of any metal in the S&P GSCI index. The Federal Reserve raised its forecast for growth in the US, the world’s biggest economy, to a range of 3.4 per cent to 3.9 per cent, from 3 per cent to 3.6 per cent.
Libyan supplies
Oil climbed to the highest price since September 2008 in February. Oil rose after estimates showed exports from Libya, the third-largest producer in Africa at about 1.6 million barrels of oil a day, was cut. Barclays Plc said output was reduced by more than 1 million barrels a day, while the International Energy Agency said output was down 850,000 barrels. Clashes between Gaddafi and rebels intensified in the second half of February. Futures gained 5.2 per cent to $96.97 a barrel in New York last month, reaching $103.41 on February 24.
Cotton advanced 14 per cent to a record $1.9123 a pound, leading gains in crop prices. Production in China, the world’s biggest importer, fell 6.3 per cent to 5.97 million metric tons last year, the third consecutive drop, data from the National Bureau of Statistics in Beijing show. Futures have risen 32 per cent in 2011 through February, the biggest gain to start a year, according to Bloomberg data starting in mid-1959.
Rising commodities are feeding inflation. Brazil’s price increased to 6.08 per cent in the 12 months through mid-February, the fastest rate in more than two years. India’s benchmark wholesale inflation rate averaged 9.4 per cent in the nine months through December, the most in the past decade, the finance ministry said in a report on February 25.
