News

August 11, 2008

Stronger Dollar and Holiday Season Takes Toll On Commodity Markets

By Sally White Reporting From War Torn Georgia

The UBS Bloomberg Constant Maturity Commodity Index has fallen by 15 per cent in the last five weeks, on profit-taking partly because of the dollar's rally. The dollar rose last week to the highest since February against a basket of the euro, yen and four major currencies. But over the last six years the dollar index has fallen by 34 per cent, bringing funds into commodities and boosting prices to new records.

Other factors for the fall have been prospects of better harvests and falling industrial demand during the summer holidays. ``When the dollar rallies as much as it has, it reduces the investment in commodities...'' Roy Huckabay of the Linn Group in Chicago was quoted as saying. ``People that bought looking for improved demand at lower prices, are getting beat up today.''

World coffee output forecasts for 2008-09 remain unchanged from June estimates at 128 million 60 kg bags,...