Briefly: Commodities up in July, and more news for Wednesday

(August 27, 2008) Commodity prices surged in July, gaining 4% month-over-month, according to Scotiabank’s Commodity Price Index. That makes it the seventh consecutive record-setting month.

The broad-based commodity index tracks the 32 separate materials that make up the bulk of Canada’s resource exports. The index has climbed 226.8% since its cyclical low in October 2001, according to Patricia Mohr, vice-president, economics and commodity market specialist, Scotia Economics.

“The strength of this upswing is a testimony to the remarkable growth of ’emerging-market’ demand this decade in the face of significant supply constraints in many resource sectors,” Mohr says.

Metals and minerals were the top gainers in July, climbing 5.9% from June, with copper and aluminum rising in response to China temporarily closing smelters prior to the Olympic Games. Meanwhile, the price of potash alone has risen 277% since July 2007.

China is expected to ramp up electricity production now that the Olympics have left town, which should drive the price of coal higher through the remainder of the year. At the same time, Chinese coal is being exported while global prices remain buoyant.

Scotia’s oil and gas index reached a new high in July, despite crude falling back from its highs of $147 per barrel for West Texas Intermediate. Consumers finally reduced their usage of petroleum products, but supply risks helped support prices as tensions in the Caucasus heightened, prior to August’s Russian invasion of Georgia.

One soft spot in the overall commodities index was the agricultural sector, as harvest season brought more wheat and canola to market, undercutting soaring prices. Moderate gains in the price of barley, hogs and cattle were not enough to offset the losses.

Infrastructure ETF launched

(August 27, 2008) Claymore Investments has announced the launch of the Claymore Global Infrastructure ETF, which is designed to track the performance of the MFC Global Infrastructure Index, net of expenses.

That index invests in companies in the infrastructure sector, using a quantitative bottom-up, multi-factor selection process. Examples of those investments include toll roads, seaports and railways, gas and electricity transmission, water pipelines and treatment plants, and even hospitals, schools and prisons.

“Investments in infrastructure-related securities may serve as a potential hedge against inflation and also offer the potential to deliver superior investment returns, as governments in both developed and developing countries increasingly focus on the need to make adequate investments in infrastructure assets,” said Som Seif, president and CEO of Claymore Investments, Inc.

(08/27/08)

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.