15/09/2014 (Borneo Post) - Since the second quarter, general commodities have been dropping. In Malaysia, FCPO (palm oil futures) slid from RM2,900 per tonne highs and sequentially, it went down on monthly basis to the current RM1,900 per tonne regions.

In Singapore, TSR20 (Rubber Futures) declined from US$2,200 per tonne to current US$1,600 per tonne, bottoms. Other commodities like soybean, soybean oil, sugar, wheat and corn are also plunging in prices this year and trading at almost intra-year low regions currently.

Among all commodities, only cocoa and coffee prices have escalated this year. The reasons are shortage in production of cocoa and geopolitical risk in West Africa continent, while Brazil has been suffering drought weather condition since the year began.

Generally speaking, the general commodity price trends has moved inversely to US dollar direction. In summary, a rapid increase in the value of US dollar would punt down the commodity prices in order to balance the inflation check.

Since June, USDX has been climbing from 79 bottoms to 83 tops, influenced by market reactions. It could probably see higher interest rates toward the year-end. In the global commodity asserts, precious metal and energy are the leads among other commodities as they are heavily traded in dollar denominations on the daily markets, worldwide. Effectively, they refer to gold and sweet crude.

Taking a peek at both instruments, yellow metal has been trading in weak demand since January; ranging from US$1,200 per ounce to US$1,390 per ounce. Gold has moved back to US$1,260 regions. For WTI crude, it has been trading from US$90 per barrel to US$108 per barrel since January. However, it has retreated down to US$93 per barrel regions now.

DAR Wong is a licensed Fund Manager in Singapore with 25 years of trading experiences in global financial markets. The expressions are solely his own. He can be reached at dar@pwforex.com