Commodities Rise to Two-Year High as Cotton Jumps to Record, Cocoa Gains

Commodities jumped to the highest in more than two years, led by gains in agriculture as cotton increased to a record amid dwindling stockpiles and cocoa advanced to a 32-year high on political unrest in Ivory Coast.

The Standard & Poor’s GSCI Total Return Index of 24 commodities reached 5,489.5 points, the highest level since November 2008. Cotton gained the maximum allowed on ICE Futures U.S. in New York, and cocoa touched the highest since 1979. Cotton and corn prices “appear to have the most upside,” Rabobank International said.

“Export commitments out of the U.S. continue at record pace and due to the razor-thin expected ending stocks, demand must be rationed as there is not enough cotton,” the bank said in a report yesterday. “The need to ration demand in a marketplace where mills have demonstrated a willingness to buy high-price fiber will keep values elevated and limit corrections.”

Cotton futures for May delivery gained the maximum allowed 7 cents, or 3.4 percent, to $2.127 a pound in New York at 10:28 a.m. London time. The price will average $1.65 a pound in the second quarter, Rabobank said in the report. Wheat futures for May delivery gained 9.5 cents, or 1.2 percent, to $8.33 a bushel on the Chicago Board of Trade. Corn and soybean futures both rose 0.2 percent in Chicago.

“While the U.S. cotton planting season is still a month away, the current dry conditions in the South and strong La Nina suggest that soil moisture deficiencies could be an issue,” the bank said.

Cocoa for May delivery rose $17, or 0.5 percent, to $3,750 a metric ton in New York. The price earlier touched $3,775 a ton, the highest since January 1979.

Turmoil Spurs Gold

Gold is poised for a fifth weekly gain, its longest such run since October, as turmoil in North Africa and the Middle East boost demand for the metal as a haven for investors.

Immediate-delivery bullion rose $2.46 an ounce, or 0.2 percent, to $1,418.46 an ounce in London. The metal gained to an all-time high of $1,440.32 on March 2. The contract for April delivery climbed $2.30, or 0.2 percent, to $1,418.70 an ounce.

As oil has climbed above $100 a barrel in New York, mounting inflation pressures in Europe prompted European Central Bank President Jean-Claude Trichet yesterday to say the ECB may raise rates next month for the first time in almost three years.

Oil rose on speculation political unrest in Libya will disrupt supply as economic data from the U.S. shows signs of increasing demand. Brent oil for April delivery rose as much as 1.2 percent to $116.20 a barrel earlier today. Crude oil rose as much as 1.1 percent to $103.03 a barrel in New York.

Libyan opposition leaders rejected a mediation offer by Venezuelan President Hugo Chavez, an ally of Muammar Qaddafi, and armed rebels held out against regime attacks and prepared to push toward the capital, Tripoli. A government report today may show payroll gains in the U.S. accelerated in February, spurred on by an improving economy and more seasonable temperatures, according to a Bloomberg News survey of economists.