Adding music to the preparation and tasting of coffee can "undoubtedly affect our mood," a scientist explains.
(Bloomberg) -- Commodities rose to their highest in almost eight years amid booming investor appetite for everything from oil to corn.Hedge funds have piled into what’s become the biggest bullish wager on the asset class in at least a decade, a collective bet that government stimulus plus near-zero interest rates will fuel demand, generate inflation and further weaken the U.S. dollar as the economy rebounds from the pandemic.The Bloomberg Commodity Spot Index, which tracks price movements for 23 raw materials, rose 1.6% on Monday to its highest since March 2013. The gauge has already gained more than 60% since reaching a four-year low in March 2020.Advances on the day were helped by copper, which rose above $9,000 a metric ton for the first time in nine years, before extending gains further on Tuesday. Oil also jumped to the highest in more than a year on speculation that global supplies are rapidly tightening, while coffee and sugar rose.“Folks who have really ignored commodities for quite a long time are now starting to get positioned,” said Bart Melek, head of commodity strategy at TD Securities. “The implication is that this could go on for a bit. It’s very much a function of expectations of scarcity.”JPMorgan Chase & Co. said earlier this month that commodities appear to have begun a new supercycle -- an extended period during which prices are well above their long-run trend. That echoes similar comments from others including Goldman Sachs Group Inc. Commodities have seen four comparable cycles over the past 100 years.The asset class is typically viewed as a good hedge against inflation, which has recently become more of a concern among investors. The commodities rally will be a story of a “roaring 20s” post-pandemic economic recovery as well as ultra-loose monetary and fiscal policies, JPMorgan analysts led by Marko Kolanovic said Feb. 10.Commodities may also jump as an unintended consequence of the fight against climate change, which threatens to constrain oil supplies while boosting demand for metals needed to build renewable energy infrastructure and manufacture batteries and electric vehicles, they said.Copper is surging amid a broad rally in metals from iron ore to nickel. The bellwether industrial commodity has doubled since a nadir in March, also boosted by rapidly tightening physical markets and prospects for rebounding economic growth.“The mega-trends that we see playing out around global population growth, the electrification thematic and the energy transition, all of these bode well for commodity demand over the medium-to-long term,” Mike Henry, the chief executive officer of mining giant BHP Group, said last week in a Bloomberg Television interview.Commodities swings have huge impact on cost of living since they can encompass the price of fuels, power, food and construction projects. They also help shape terms of trade, exchange rates and ultimately the politics of commodity-dependent nations like Canada, Brazil, Chile and Venezuela.(Updates with prices in fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
One of the world’s leading commodity traders, Louis-Dreyfus Company (LDC), has opened up to outside ownership for the first time in almost 170 years. The trader has sold a 45pc stake to ADQ, the Abu Dhabi state-owned holding company and also agreed a long-term supply agreement for the UAE. Owner Margarita Louis-Dreyfus, who also chairs LDC’s supervisory board, said the partnership marked a “milestone" in the firm's strategy. She has been seeking new investment after tightening her control in December 2018 when she bought out family members, borrowing about $1bn (£755m) from Credit Suisse to do so, pledged against her stake. Micheal Gelchie, LDC chief executive, said the firm and ADQ had a “shared ambition” to invest in innovation and technology that could “transform food and agricultural production”. LDC is one of the ABCD quartet of leading commodity traders, alongside Archer Daniels Midland, Bunge and Cargill. Founded as a grain trader in 1851 by Leopold Louis-Dreyfus, it produces, stores and ships about 80m tonnes of cotton, rice, sugar, grain and other agricultural products a year, with 2019 sales of $33.6bn and profit of $230m. Leopold’s great grandson, Robert Louis-Dreyfus, took over in 2006, three years before his death from leukaemia, when he put his wife Margarita in charge of the trust that held his 61pc stake. Commodities traders have been trying to diversify in recent years amid rising competition and trade wars. LDC has invested in partnerships with Leong Hup International, the poultry business based in Malaysia, and Luckin Coffee, the Chinese coffee chain. The terms of its deal with ADQ were not disclosed. LDC said at least $800m from the sale would be invested to support its long-term plans. H.E. Mohamed Hassan Alsuwaidi, chief executive of ADQ, said: "We share LDC’s vision for future growth of the business, and look forward to partnering with LDC’s existing shareholders and management team to capitalize on the sector’s emerging opportunities."