Cargill, which operates in 66 countries, is a leading U.S. grain exporter, biofuels producer and energy trader.Chris Bolin
It doesn't look as though investors have lost their appetite for commodities, despite the volatility of the past couple of weeks - and that might help to explain why key commodities made an impressive comeback on Thursday afternoon.
Crude oil had been down as low as $95.25 (U.S.) a barrel on Thursday, marking a three-month low and bringing the total decline since late April to about 16 per cent. It then rebounded to $98 a barrel, down just 21 cents. Other commodities made similar 180s.
Why? A report from Bloomberg News suggests that commodity-based exchange traded funds have been drawing large investor interest over the past week. More specifically, the U.S. Oil Fund ETF , which tracks the spot price of West Texas Intermediate light oil , attracted more than $514-million, according to research firm XTF Inc.
Similarly, the Market Vectors Agribusiness ETF , which tracks 46 agriculture-related companies, attracted about $500-million over the past week.
Bloomberg quoted Nicholas Colas, chief market strategist at BNY ConvergEx Group: Investors "are not yet willing to give up on the weak dollar and inflation trade," he said. "They are cycling into agriculture and energy-oriented investments, even though the price action is choppy."
David Berman