The global commodity markets rode on a bullish sentiment during the week buoyed by encouraging macroeconomic news coming from various quarters including the statement from the OECD that recovery in the G-7 countries is gaining strength, the larger-than-expected in March non-farm payrolls in the US and the declining unemployment rate there. As a result most of the leading global commodity indices closed at a higher level by the end of the week.

At the beginning of the week the global commodity markets opened to the news of demonstrations and strikes in Algeria and Nigeria fueling concerns about supplies of brent crude putting an upward pressure on crude oil prices. This fed into inflationary expectations which in turn increased the appetite for precious metals as safe haven assets pushing up the prices of gold and silver. The weakening dollar (against the euro) further supported the commodities as a weak dollar makes commodities (which are dollar denominated) cheaper increasing the demand for them.

Among the commodity groups the precious metals complex saw quite a bit of gain with gold prices having risen by 3.10% by the end of the week but silver prices rose more and increased by 7.29% during the week. This brought the gold/silver ratio to about 36. 31 by the end of the week whereas a year back this ratio was around 80. Silver is seen as a poor person?s gold and often investment in silver rises to catch up on the gold-silver price ratio whenever there is a surge in the price of gold.

The other commodity that made headlines because of a rise in its prices was crude oil. Price of brent crude increased by 6.38% and that of WTI increased by 4.15% during the week. This was largely in reaction to better US jobs data and general positive sentiment about global economic recovery.

Though the dampener came in the form of the European Central Bank raising its interest rate by 25 basis points and the Chinese government also raising its one year policy rates by 25 basis points during the week but this did not exert too much downward pressure on the commodity futures markets.

Among the agricultural commodities wheat and corn ended higher by the end of the week; wheat because of the USDA announcing a lower June ending stocks than earlier estimated. Corn ended higher mainly reacting to the news of lower than

estimated corn production in South Africa and increased Chinese imports.

Among the soft commodities cotton gained by 4.08% whereas sugar prices fell by 6.86%. Cotton prices rose mostly as a reaction to news of less than estimated US acreage of the crop reports of low carry over stock estimates. Sugar prices fell mostly because, despite some concerns to the contrary the markets expect comfortable sugar supply.

In the Indian commodity space the precious metals mostly tracked the international trends during the week. Among the agricultural commodities maize was steady during the week but gained by the end of the week. During the week the gain was about 1.35%. Wheat futures price rose a bit during the week but by the end of the week the price came down and overall gain during the week was only about 0.22% as the market was confident about the record output in wheat expected this year. Pepper futures, like in the previous couple of weeks, sustained the bullish sentiment and registered a weekly gain of 3.48% as the market continued to react to the expected low supplies of pepper in the international market. Sugar futures fell continuously during the week reversing the trend only by the end of the week though the weekly fall in price was about 1.46%.

The author is a senior economist, NCDEX. View are personal