Non-energy commodity prices rose 2.0 percent in April due to supply concerns and depreciation of the dollar—down 1.6 percent against a broad group of currencies. However prices for many commodities fell in early May on concerns about slowing demand and a sharp gain in the value of the dollar, Silver, cotton, and sugar (and crude oil) fell most.
Crude oil prices jumped 7.0 percent in April, up for a ninth straight month, hitting a high for the year of $119.6/bbl at month-end. In early May oil prices then plunged 13 percent on concerns about demand and sharp reversal in the dollar, accelerated by program trading on futures and options markets. Supply risks remain, however, given continuing political unrest in North Africa and the Middle East, and OPEC’s muted response to production losses in Libya and Yemen--in part because of the difficulty replacing light/sweet crude. Product stocks have declined, especially for gasoline, and refinery demand for crude is picking up to meet summer demand following seasonal maintenance.
Agriculture prices increased 1.5 percent in April, with the strength mainly in grains, up 5.8 percent. Maize and sorghum prices jumped 9-10 percent due to late planting in the U.S. because of wet weather, while wheat prices rose 6 percent due to drought that has affected winter crops in the U.S., Europe and China. Tea prices rose 9 percent on arrival of premium new teas in India, while rubber prices increased 8 percent on weather-related supply constraints. Cocoa, sugar and cotton recorded declines on improving supply conditions. In early May, prices fell for most agriculture commodities, but stocks of major grains remain low and prices could rise should the 2011/12 crop outlook deteriorate.
Metals and minerals prices rose 2.2 percent in April, following a sharp decline in March, but the strength was concentrated iron ore, tin and aluminum where supplies are relatively tight. For aluminum, a significant portion of inventories are tied up in financing deals. The largest gain in April was for the precious metal silver, up 19 percent, on strong investment demand. In early May, metals prices fell sharply on concerns about demand and inflation. However base metal prices had already come off their early-April highs because of rising stocks, weak Chinese imports, and concerns about policy tightening in China. The largest drop in early May was for silver, plunging 26 percent following its meteoric rise this year.
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