Commodities Head for Biggest Monthly Increase in 32 Years ("Skyrocketing")

[TexasLawyer]

Source: Bloomberg

Commodities Head for Biggest Monthly Increase in 32 Years

By Millie Munshi

Sept. 28 (Bloomberg) -- Commodities headed for the biggest monthly gain in 32 years, led by wheat, crude oil and gold, as the dollar's slump enhanced the appeal of energy, grains and precious metals as a hedge against inflation.

The 19-commodity Reuters/Jefferies CRB Index was up 8.7 percent this month, the most since July 1975. Wheat climbed to a record in September amid a global grain shortfall, boosting corn and soybeans. Oil also hit a record, and gold reached a 27-year high. The Federal Reserve cut borrowing costs to bolster the U.S. economy, sending the dollar tumbling.

``The Fed has signaled pretty clearly that they will answer the problem of a slowing economy with greater liquidity,'' said Chip Hanlon, who manages $1 billion at Delta Global Advisors Inc. in Huntington Beach, California. ``We're in a bullish phase for commodities.''

<snip>

`Skyrocketing'

The rate cut sparked inflation concerns. Some investors buy commodities to hedge against rising consumer prices, and the falling dollar makes raw materials priced in the U.S. currency cheaper for buyers holding other currencies. The cut in U.S. borrowing costs will continue to weaken the dollar and lead to "skyrocketing" prices for commodities, Jim Rogers, chairman of Beeland Interests Inc., said in an interview this week. He co-founded the Quantum Hedge Fund with George Soros in the 1970s.



Read more: http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=aPttN5PY7Uhg

[lonestarnot]

1. Commodities.

I wish I had some money to invest. Think I'll grow my own commodities.

[monktonman]

4. "grow" my own commodities.

Um...yeah...me too.

[roguevalley]

15. sucks to be us but a harbinger for the future, I am afraid. I'm glad

I'm old. I would be afraid to be young now.

[TexasLawyer]

2. Bad news for the world's hungry and poor

and for everyone else who needs to eat.

Historic Surge
In Grain Prices
Roils Markets
By SCOTT KILMAN

September 28, 2007; Page A1

Rising prices and surging demand for the crops that supply half of the world's calories are producing the biggest changes in global food markets in 30 years, altering the economic landscape for everyone from consumers and farmers to corporate giants and the world's poor.

"The days of cheap grain are gone," says Dan Basse, president of AgResource Co., a Chicago commodity forecasting concern.

This year the prices of Illinois corn and soybeans are up 40% and 75%, respectively, from a year ago. Kansas wheat is up 70% or more. And a growing number of economists and agribusiness executives think the run-ups could last as long as a decade, raising the cost of all kinds of food.

<snip>

http://online.wsj.com/article/SB119093856250042023.html?mod=googlenews_wsj

[Warren Stupidity]

3. 8.7 in one month?

I'm sure hoping that is an annualized rate not the actual one month increase. Oh wait, that is the one month increase. Yikes.

[Theres-a]

5. George Soros-"Burma's billionaire"

Interesting article.....http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=1929731&mesg_id=1930596

[Trillo]

6. Thank goodness the uber wealthy won't need to worry.

Rising food prices are but a virtually unnoticeable downtick in their disposable incomes.

[Recursion]

7. Are we watching the collapse of Bretton Woods? nt

[ret5hd]

8. Ya think???

Bretton Woods per Wiki:
The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold

[Captain Angry]

12. Wasn't Bretton Woods killed in 1971?

Nixon closed the gold window and the US Dollar floated independently with no basis on reserves?

With the dollar weak, it encourages foreign money to fly to this country to buy our assets. Unfortunately, when the dollar was strong, we just used it to buy cheap crap from other countries.

Spanish companies buy our toll roads.
We buy plastic toys laced with lead.

Chinese companies buy our steel mills.
We buy new paper because recycling and reusing our own newsprint would just be silly.

We are not buying products that are the means to have a strong economy. And we're damn sure not spending out money internally on infrastructure.

Gold is a symptom. It will fall again. It will rise again. I wish I'd bought at $300, but I don't know if I would have sold at $450, $600, etc.

[superconnected]

9. Time to stock up on food and blankets.

See with the run on banks in Europe and the closing of the internet bank is a pretty good indication that will happen here.

People need to stock up on food. Just in case. Grain would be a great investment on wallstreet right now but then all commodities would. What if they suddenly rise in price due to becoming sparse.

If the bank issue hits us, I think people won't get their money out of banks and comodities will rise in price. And I think having top ramen in the cupboard would save poor/lower middle class people from starving to death. I was considering calling my mother today and telling her to get to the store and stock up on grains, when the internet bank issue came out this morning. I also think getting blankets to keep warm for the winter would be a very good idea. Just in case.

The commodities expected to go up(why they are being invested in, in large stock buys right now) sounds terrifying. The pros who buy the biggest stock purchases know what's coming. Often they drive it.

[Theres-a]

13. Closing of the internet bank?

I need to reread the article,is that where that was?

[superconnected]

10. bump.

[Mnemosyne]

11. I am sooo grateful that the wealthy will not go hungry. n/t

[lovuian]

14. wages are going to have to go up

this is INFLATION

[TexasLawyer]

17. Inflation is the "silent tax"

The Bushies tell us they're against imposing new taxes, but inflation can be a large and very regressive tax.

And they use all kinds of tricks, like "hedonic pricing" to conceal what we all know-- that consumer prices have gone up significantly over the last few years.

[TexasLawyer]

16. Oil-- another very important commodity

Brent crude jumps as dollar tumbles

By David Litterick
Last Updated: 11:11pm BST 28/09/2007

The price of oil jumped to record levels as the weakening dollar drew investment funds into the commodity market to hedge against the falling greenback. In London, Brent crude for November delivery rose more than a dollar to an all-time intraday high of $81.05.

<snip>

Foreign funds in particular have been buying heavily as the weaker dollar makes dollar-denominated oil cheaper to those with stronger currencies. Switching from cash into oil helps investors protect the value of their investments and hedge against further falls in the dollar.
<snip>

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/29/cnoil129.xml