Chicago (Kitco News) - if the Federal Reserve can provide additional incentive for the US economy, it would be for one of the largest price support raw materials for the rest of the year as investors will try again, snap to hard assets.
"If we had as I 'qe3d' - call it that, because each film now in 3D-ist, prices for raw materials will rise then again." "It would be the most bullish factor," said Phil Flynn, energy analyst for PFG best research.
Fed Chairman Ben Bernanke said at the Congress examined on Wednesday that the Fed will crumble several untested ways to promote the growth of economic conditions.
This comes on the heels of the minutes of the June Federal open market Committee late Tuesday released, which showed that some members for the benefit of the additional stimulus would be if the economy ground to a halt.
The combination of these two comments sent gold prices to record levels and raised a significant rally in the stock market on Wednesday.
Flynn said within a range at Dow Jones index commodity mid-year review and Outlook here.
If the Fed of second quantitative easing program ended in June, it coincided with the decline in commodity prices across the Board, and Flynn said no added attraction prices would withdraw. He said that without a third stimulus program and with the Outlook for the global demand slowed in the fourth quarter, crude oil prices could be around $85 per barrel. "If they do a QE3, then the game is bullish." We could see $110-120 oil instead of $85. He said "That also have a significant impact on the heating and gasoline would have".
August Treaty of crude oil prices on the New York Mercantile Exchange about $98,62 a barrel on Wednesday were trading.
On a side note, he said that the unrest in some countries of the Middle East, known as the Arab spring, have had impact on gasoline prices. The price between Brent crude oil, crude oil, the U.S. benchmark, spreading European benchmark and West Texas intermediate, widened sharply because of the loss of Libyan crude oil production. Because of the that sharp difference the release of oil reserves by the international energy administration was the right move, he said.
"It was real tightness of light, sweet crude delivery in Europe." "There are reserves for a time of war and it is war," said Flynn.
Commodity index easily by year
The Dow Jones-UBS commodity said index 2.62% for the first half of the year, John Prestbo, editor and Managing Director of the Dow Jones indexes. Precious metals were the best performing sector in the index, win 6.82%, while grains were worst sector, sliding 9.72%, he said. For comparison, a stock market index is Dow Jones industrial average 6.37% for the first six months of the year 2011.
Prestbo found that investors money in the commodities market with 76.9 billion continue to $ tracking the DJ-UBS commodity index put up 31 of $62 billion December.
John Kowalik, Managing Director with UBS' commodities investor group, said that asset managers for its investor clients, rather than simply offer a stand-alone part of their portfolio commodities as an inflation hedge.
"Commodity investing (has) become... an important part of the new investment strategies such as inflation protection and absolute return products." "Invest in addition to pure organic, still improved are investors and investment managers strategies through enhanced index, change their portfolio risk exposure, such as forward indexes and commodity sub index with search", he said.
He said institutional investors take to invest one "slow and steady" view of the product and do not respond to fluctuating daily market action.
It has lot of discussion about "excessive speculation" but Kowalik nor Flynn said that they have seen it.
Comments on excessive speculation come to, if "markets do not, what (people) they want to do", Flynn said.
He said that the increase in commodity prices is a side effect of the loose monetary policy. "The Government and the fed to not admit that it has an effect on prices." "They say, they kept the markets crash, but don't want to say it, what it did to the dollar and how it raised commodity prices", he said.
OUTLOOK FOR OTHER MARKETS
The Outlook for metals continue based on the global economic uncertainty, said Patricia Cauley, Director, metals at CME Group products.
"The flight for security on as investors claim interest in gold and multi purpose metals Platinum and silver in response to Europe's debt crisis and a slowdown in the global economy." On the industrial side continued uncertainty in global growth could result in additional volatility in copper and steel, "she said."
She added that the CME Group are not from price forecasts for metals "and don't mind if prices go up or down" as this larger volume means.
Jack Scoville, Vice President of futures price group, said that the grain markets will remain very volatile for the next few months, such as extreme weather conditions hot could distort the yields for corn and soybeans.
The cool wet spring in the mid-West delayed cultivation of corn and soy crops and this means that these two crops pollination happens in summer. Hot weather can interfere with pollination, which yield can reduce the plant.
If she sees corn normal weather, income can be good. Prices could fall, with a harvest low of $5.50 based on the nearby future, although $4.50 is not excluded. However, if the weather is dry or drought in the South of United States further north move prices to "the upper $7 s or even as high as $8.50 $ 8.75 are not in question."
Chicago Board of trade December corn futures have been around $6,76 per bushel on Wednesday trade.
Scoville Planzahl model soybeans about $13.50 per bushel price, supply from Brazil plenty remains. A solid crop could prices lower, the $10-hit region. CBOT November soybeans were approximately $13.76 a bushel Wednesday trade.
Wheat prices are under pressure as Russia is continued, the grain to export a recovery in production after last year's disastrous harvest.
But overall the prices should be supported. "" Prices for cereals will remain extremely volatile, but keeping high overall should, while demand remains strong from developing countries and as production potential in the United States and abroad remains uncertain because of extreme weather events, "said Scoville."
By Debbie Carlson of Kitco news dcarlson@kitco.com
http://www.Kitco.com /.
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