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Dow Jones-UBS Commodity Index up 3.74 per cent YTD

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The Dow Jones-UBS Commodity Index is up 3.74 per cent so far this year, with the Industrial Metals Sub-Index posting the strongest sector year-to-date gain of 36.87 per cent.

The Dow Jones-UBS Commodity Index is up 3.74 per cent so far this year, with the Industrial Metals Sub-Index posting the strongest sector year-to-date gain of 36.87 per cent.

However, commodity analysts speaking at the eighth annual Dow Jones Indexes Mid-Year Commodity Outlook said oil prices face further declines in second half of 2009.

"There have been positive signs of a global economic recovery in the first half of 2009. However, these bullish sentiments may only be temporary and in fact we still have a ways to go before the crisis is over. My estimates place crude oil at USD35/barrel, heating oil at USD150 and RBOB gas at USD125 by the end of the year," said Phil Flynn, senior energy and general market analyst, PFG Best Research.

Analysts said grain prices have been disrupted by the economic turmoil, but they believe they will stabilize once a recovery prevails.

"Economic pressures in recent years have helped create the extreme volatility in the commodities markets and will help lead them to a new level of trading as prices for physical and paper assets realign into a more traditional relationship than has been seen in the last couple of decades," said Jack Scoville, vice president, Price Futures Group. "For grains, prices for these goods are trying to find a new level to trade due to the big changes seen in economics here and around the world. This has proved very disruptive in the short term to many pricing strategies, but many of these traditional methods will become more feasible once the economy as a whole moves past the current period of turmoil and into a sustainable period of moving forward once again."

Near-term gold and silver prices have been impacted by fate of the US dollar as the world’s reserve currency.

"Gold is now in its tenth year of a cyclical bull period marked by a shift in economic power from developed countries to oil exporting countries. This upheaval parallels changes in the overall global economy, which is being driven by emerging markets of China, India and Brazil. As developed countries have been hit hard by the credit crisis, monetary flows have moved to alternative hard investments like gold and silver. A key factor that will determine gold and silver prices for the rest of 2009 and into 2010, however, is the viability of the U.S. dollar as the world’s reserve currency," said Stephen Platt, senior account executive, Archer Financial Services.

The Dow Jones-UBS Commodity Index, a diversified and highly liquid benchmark for the commodities markets, is composed of futures contracts on physical commodities and was introduced in 1998. The 19 commodities currently in the index are: aluminum, cattle, coffee, copper, corn, cotton, crude oil, gold, heating oil, hogs, natural gas, nickel, silver, soybeans, soybean oil, sugar, unleaded gas, wheat and zinc. The Dow Jones-UBS Single Commodity Indexes include sub-indexes for the 19 commodities in the composite index, plus cocoa, platinum, lead and tin.

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