News

November 03, 2008

Strong US Dollar Still Bears Heavily On Commodity Trading

Sally White

Food commodity prices collapsed as the dollar recovered, the Reuters/Jefferies CRB Index of 19 raw materials plunging 24 per cent in October,the steepest decline since at least 1956. The US Dollar Index, which measures the currency's performance against six counterparts, rose by 7.5 per cent, the best performance since October 1992 and making commodities more expensive for those with other currencies. "October is at last ending -- the worst month in commodity history," said Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt. "Investors are expecting lower growth for the longer term and that is putting prices under pressure".

Worldwide rice panics in which shortages caused riots in several countries have swung right round over the summer into serious concern about the impact of a glut. Traders are saying that they are uncertain how far prices will fall. Since hitting a US$1,080 a tonne peak in April, prices have come down by over 40 per cent. Even in the US, where hurricanes flattened rice paddies in Arkansas and Texas,prices are plummeting. Rice markets are expected to fall further yet, with unwinding of...