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Ole S Hansen, Head of Commodity Strategy at Saxo Bank, said in a weekly update that much of the market attention was captured by the monthly US job report which in the end turned out to be the strongest since last Nov..

05 Apr 2014

LONDON (Commodity Online): Commodities has begun on a quiet note in April with a boost given to grain sector from two US government reports that showed alarmingly low inventories, energy sector weakened while industrial and precious metals sectors showed strong performance.

Ole S Hansen, Head of Commodity Strategy at Saxo Bank, said in a weekly update that much of the market attention was captured by the monthly US job report which in the end turned out to be the strongest since last November as the negative imact of the harsh winter faded.

The energy sector was weaker on the prospect that Libya's major oil ports may finally open which could boost supplies at a time of seasonal weak demand.copper steadied above key support on Chinese stimulus hopes. Gold recovered after the US job report settled a few nerves. Overall the broad based DJ-UBS commodity index finished close to unchanged as metal gains were offset by losses primarily in energy and soft commodities.

The soft sector was hurt by renewed long liquidation among most of its components, not least sugar and coffee which were sold due to ample supply of sugar from Brazil and coffee from Vietnam and Central America. Brazil's production of coffee is still on track to record a 20 percent reduction following the hot and dry weather which reduced this year's crop and triggered a strong rally back in February and March.

World food prices rose to a ten-month high in March as crop damages from dry weather across the globe, a freezing cold winter in the US and geopolitical tensions in the Black Sea region lifted the cost of many food items from beef to wheat. The World Food Price Index from the UN Food & Agriculture Organisation, which tracks the price developments in 55 food items, rose by 2.3 percent to the highest level since last May. The index currently at 212.8 has been rangebound between 200 and 220 since peaking at 240 in 2010, the year when food security was top of the agenda following a surge in price of key foods and which indirectly led to the Arab Spring uprising in December that year.


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