Commodities on longest winning streak in history

Commodities are forging a recordsetting run of gains that straddles the end of 2017 and the start of the new year as crude oil notches multiyear highs and investors bet that booming global manufacturing output will help to sustain rising demand for raw materials. The Bloomberg Commodity Index posted an unprecedented 14 days of gains to Wednesday, closing at the highest since February. The index is poised for further gains as metals and oil climb higher, supported by supply disruptions, a weaker dollar and improving demand.

Palladium, a metal used in car exhaust systems, is approaching an all-time high.

Commodities eked out a second annual gain last year and heading into 2018, banks including Goldman Sachs Group Inc. are optimistic there will be further advances. Last month, the firm reiterated its 12-month overweight recommendation.


The index has rebounded 12 per cent since mid-June. In recent days, the cold snap in the US, which helped to boost wheat as well as natural gas, also helping to lift the index. Still, prices remain well below the highs from 2008. Copper, a bellwether for global manufacturing, climbed 1 per cent after US factory output data on Wednesday beat expectations.

China also imposed heavy curbs on scrap imports, leaving buyers there more reliant on mined output, which analysts see tightening in the months ahead.

Record readings for manufacturing in Europe earlier in the week are also adding to the bullish mood. Chinese factories are likely to boost output to meet rising overseas demand, adding momentum to the spell of synchronized growth across major global economies in recent months.

“European and US PMIs have been very strong, and when you have manufacturing growing as strongly as it is in the world’s two largest economies, it’s going to have a pull on Chinese exports into these developed regions,” Max Layton, the EMEA head of commodities research at Citigroup Inc., said.