Commodities rise to two-year high on economic outlook, global demand

Commodity prices reached their highest levels in more than two years today on speculation that there will be a sustained global economic recovery and on forecasts from the U.S. calling for lower agricultural inventories.Commodity prices reached their highest levels in more than two years today on speculation that there will be a sustained global economic recovery and on forecasts from the U.S. calling for lower agricultural inventories.

The Standard & Poor's GSCI Spot Index of 24 commodities climbed 1.2 percent to 643.82 this morning in New York; earlier, the gauge reached 645.72, its highest level since September 26, 2008. According to Bloomberg, the Index has rallied 21 percent this year amid burgeoning global demand for commodities.The Standard & Poor's GSCI Spot Index of 24 commodities climbed 1.2 percent to 643.82 this morning in New York; earlier, the gauge reached 645.72, its highest level since September 26, 2008. According to Bloomberg, the Index has rallied 21 percent this year amid burgeoning global demand for commodities.

Matt Zeman, a trader at LaSalle Futures Group, affirms that the positive economic reports out of the U.S. the past few weeks have temporarily allayed concerns that growth would slow: "People are looking forward to a better economy this year, so they’re putting on the risk trade full-force."Matt Zeman, a trader at LaSalle Futures Group, affirms that the positive economic reports out of the U.S. the past few weeks have temporarily allayed concerns that growth would slow: "People are looking forward to a better economy this year, so they’re putting on the risk trade full-force."

Moreover, positive economic news has come from the euro-zone recently, including Portugal's successful bond auction yesterday and a report that asserts industrial output in the euro area rose 1.2 percent in November from the prior month - more than economists had originally forecast. The continent's largest economy, Germany, also notched a 3.6 percent increase in GDP last year, marking its highest rise since data began for a reunified country in 1992.Moreover, positive economic news has come from the euro-zone recently, including Portugal's successful bond auction yesterday and a report that asserts industrial output in the euro area rose 1.2 percent in November from the prior month - more than economists had originally forecast. The continent's largest economy, Germany, also notched a 3.6 percent increase in GDP last year, marking its highest rise since data began for a reunified country in 1992.

Corn and soybean futures are at their highest levels since July 2008, and wheat jumped after the U.S. government cut its inventory forecasts. Inclement weather across the globe has also hurt crop yields, especially in Australia where record flooding has wreaked havoc on the country's crops in Queensland state.Corn and soybean futures are at their highest levels since July 2008, and wheat jumped after the U.S. government cut its inventory forecasts. Inclement weather across the globe has also hurt crop yields, especially in Australia where record flooding has wreaked havoc on the country's crops in Queensland state.

Dan Basse, the president of AgResource Co., said that bad weather could drive certain commodities even higher: "With any weather issues, we're going to make new all-time highs in corn and soybeans, and to a lesser degree, wheat futures." Dan Basse, the president of AgResource Co., said that bad weather could drive certain commodities even higher: "With any weather issues, we're going to make new all-time highs in corn and soybeans, and to a lesser degree, wheat futures."