NEW YORK, N.Y. (Reuters) – Reports showing that China’s economy remains on the boil triggered a rally in many commodities early this week despite speculation that the giant raw materials consumer will raise interest rates soon, dampening demand.
Agricultural commodities like corn, coffee, sugar and cotton jumped three to four percent, helped by a weaker U.S. dollar and a mix of speculative and fundamentals-driven buying.
Corn found additional support from dry conditions in Argentina, where the stressed crop enters its critical pollination stage this month, said Brian Basting of Advance Trading in Bloomington, Illinois.
Read Also
Working groups established to address challenges in the containerized and bulk movement of commodities
CN is working with the pulse and special crops sector on resolving challenges in shipping those commodities.
“They’re a major corn exporter, so the fact they’re struggling going into pollination is something the market is concerned about,” he said.
China, a major commodity consumer, released a slew of economic numbers over the weekend, including inflation, which rose above five percent. Food inflation surged to a 28 month high.
Investors are watching for any policy moves that would dampen China’s demand for commodities.
Last week, it boosted bank reserves, a move investors see as less aggressive than an interest rate hike.
