Demand for commodities of all kinds is ramping up at breakneck speed. And despite fears of a slowdown in China's economic growth, Dr. Copper is leading the rise in commodities prices.
Copper earned that nickname because it's thought to be a bellwether on the health of the global economy, thanks to its numerous economic uses.
Prices slumped after Chinese Premier Wen Jiabao cut China's economic growth target to 7.5%, the lowest since 2004. China is the world's largest copper buyer, snapping up 40% of annual supplies.
However, predictions for weak copper demand were muted last Monday, as the Asian giant reported a stream of new orders pushed factory activity to an 11-month high in March. Growth in the US manufacturing sector also picked up in March, more evidence that the world's largest economy is gaining momentum. The red metal jumped on the manufacturing data and is up 13.8% year-to-date (YTD).
The news has analysts predicting demand for copper is likely to pick up steam. "The US is an important market, and with the economic outlook there brightening, demand is also likely to surprise to the upside," Commerzbank AG (PINK: CRZBY) analyst Eugen Weinberg told Reuters. But Dr. Copper is just part of the story. Just take a look at what's happening in other commodity markets...
Commodities Prices are On the Rise
If you're looking for action, look no further than the explosive commodities markets. Most of the industrial metals have been on a tear in 2012, paced by tin, which has surged to a 20.5% gain. Zinc has risen 8.8%, while aluminum is up 6%.
Food costs rose to an all-time high in February 2011, setting off riots in northern Africa and the Middle East. Corn futures climbed to a record $7.9975 in June, as US stockpiles slid to a 16-year low.
Now, US farmers are set to plant their fields with nearly 96 million acres of corn seed, the largest amount in 75 years, as corn supplies have fallen 8% year-over-year. Energy costs have followed suit. West Texas Intermediate crude oil has surged roughly 34% to $105.23 a barrel since October as tensions mount over Iran's nuclear ambitions.
In fact, almost every sector of the commodities markets has made major moves in the last 24 months, including the grains (corn, wheat, soybeans), the energies (crude oil, heating oil and gasoline), and the metals (gold and silver).
To give you an idea, since May 2010 corn is up over 100%, coffee is up 45%, crude oil is up 56% and silver has posted a whopping 86% gain.
All told, the International Monetary Fund's commodity index has risen 34% since 2010 and more than doubled since bottoming during the financial crisis in December 2008.
And it looks like there's more to come.