Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20
Reasons why Bitcoin is Treading at it's Highest Level Since 2017 and a Warning - 19th Nov 20
Media Celebrates after Trump’s Pro-Gold Fed Nominee Gets Blocked - 19th Nov 20
DJIA Short-term Stock Market Technical Trend Analysis - 19th Nov 20
Demoncracy Ushers in the Flu World Order How to Survive and Profit From What Is Coming - 19th Nov 20
US Bond Market: "When Investors Should Worry" - 18th Nov 20
Gold Remains the Best Pandemic Insurance - 18th Nov 20
GPU Fan Not Spinning FIX - How to Easily Extend the Life of Your Gaming PC System - 18th Nov 20
Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Stock Market Double Top - 18th Nov 20
Edge Computing Is Leading the Next Great Tech Revolution - 18th Nov 20
This Chart Signals When Gold Stocks Will Explode - 17th Nov 20
Gold Price Momentous ally From 2000 Compared To SPY Stock Market and Nasdaq - 17th Nov 20
Creating Marketing Campaigns Using the Freedom of Information Act - 17th Nov 20
Stock Market Uptrend in Process - 17th Nov 20
How My Friend Made $128,000 Investing in Stocks Without Knowing It - 16th Nov 20
Free-spending Biden and/or continued Fed stimulus will hike Gold prices - 16th Nov 20
Top Cheap Budgie Toys - Every Budgie Owner Should Have These Safe Bird Toys! - 16th Nov 20
Line Up For Your Jab to get your Covaids Freedom Pass and a 5% Work From Home Tax - 16th Nov 20
You May Have Overlooked These “Sleeper” Precious Metals - 16th Nov 20
Demystifying interesting facts about online Casinos - 16th Nov 20
What's Ahead for the Gold Market? - 15th Nov 20
Gold’s Momentous Rally From 2000 Compared To Stock Market SPY & QQQ - 15th Nov 20
Overclockers UK Quality of Custom Gaming System Build - OEM Windows Sticker? - 15th Nov 20
UK GCSE Exams 2021 CANCELLED! Grades Based on Mock Exams and Teacher Assessments - 15th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Commodities Top China’s Xmas Buy List

Commodities / Investing 2011 Dec 24, 2010 - 10:55 AM GMT

By: Sean_Brodrick


Best Financial Markets Analysis ArticleCommodities enjoyed a rip-roaring 2010. But as we close out the year, traders have to wonder: Is the bull party over? Will commodities slump in 2011? Not if China has anything to say about it.

China’s economy is growing at a 10% clip, and that is driving China’s demand for commodities of all types — crude oil, sugar, soybeans, copper and more — to new heights.

In fact, according to a study by Capital Economics, even if China’s economy slows down, its demand for commodities will continue to rise.

Even in a scenario of slower GDP growth and less commodities used for each unit of GDP — which Capital Economics thinks likely — China’s commodity demand will more than double by 2025.

Sean Brodrick

However, I’m more bullish, for the simple reason that China’s economy continues to zoom ahead at a rapid pace. Chinese industrial-output growth accelerated to 13.3% last month from a year earlier.

Urban fixed-asset investment also picked up its pace, rising 24.9% during the first 11 months of 2010. And retail sales gained 18.7% in November.

All these point to MORE commodity consumption in China.

In fact, if China is wishing for anything this Christmas, it’s probably that Santa leave some commodities under the tree.

Here are some fascinating facts on China and commodities:


  • China’s corn imports may jump five-fold next year to 7.4 million metric tonnes, according the U.S. Grains Council. This after China’s own corn output jumped 5.2% this year to 172 million tonnes.
  • China’s soybean imports doubled in November from a year earlier. With a population of 1.3 billion, China is the largest soybean importer in the world, consuming about 40 million tons annually. Forecasters predict that China may soon import more than 50% of global soybean production.
  • And China’s ravenous agriculture demand goes beyond food. China’s cotton demand leaped 31% from October to November, and that was a growth of 11.8% year over year. There are concerns now that China’s demand for cotton could outpace supply, and this has sent prices soaring.
  • In the past decade, China TRIPLED its copper consumption to 6.8 million tonnes. In 2011, China’s copper demand is expected to rise to 7.74 million tonnes, as that country builds out its national power grid. China now uses two out of every five pounds of copper mined.
  • But that’s still not enough. If current trends continue, China is on track to triple its annual use of copper to 20 million tonnes by 2025, according to London-based analysts CRU.
  • How is that possible? Chinese copper consumption per person still remains low compared to the United States and Japan. Copper consumption was just 3.9 kilograms per person in China last year. That compares to consumption of 6.5 kilograms per person in the United States and 8.6 kilograms in Japan.


  • China increased net imports of crude oil by 26% in November from a month earlier as refineries ramped up processing rates to ease a diesel shortage. Net purchases were 20.3 million tonnes, or 5 million barrels a day, according to the Beijing-based General Administration of Customs. Meanwhile, diesel imports in November jumped a whopping 50.1% year on year, and that was also up 275% from October.
  • And China’s total oil demand surged to an all-time high of 38.09 million tonnes (9.3 million barrels per day), according to Platts analysis of official data.
  • Demand from China is the main reason why the International Energy Agency (IEA) ratcheted up its forecast for crude use worldwide next year to an average 88.8 million barrels a day. That’s about 260,000 barrels more than its previous forecast. The IEA says China accounts for about half the growth outside the Organization for Economic Cooperation and Development.


China’s imports of gold jumped nearly five-fold in the first 10 months of this year compared to ALL of last year. That amounts to 209 tonnes in the first 10 months of 2010 compared to 45 tonnes for all of 2009.

I’ve covered many of the forces driving China’s demand for gold (and silver too) in stories like this one and this one. The fact is, we are seeing a huge shift in Chinese gold demand, a shift so big it probably qualifies as a megatrend.

Could China’s Commodity Demand Implode?

I’ve been hearing “end-is-nigh” forecasts about how China’s bubble is going to burst for three long years. I’ve also heard that a lot of the residential and commercial buildings that have been constructed in China over the past few years remain empty, and yet new buildings continue to go up at a frantic pace.

If those stories are true, China probably has a day of reckoning coming, and we’ll deal with hit when it happens … but if you’re betting on the bears now, you can lose an awful lot of money waiting to be right.

Sean Brodrick

It’s also true that inflation in China is running too hot. The consumer price index (CPI) rose to 5.1% in November. That’s a 28-month high. The Producer Price Index (PPI) also continued to climb.

A way to deal with inflation is to raise interest rates — which also chokes business activity and should lower demand for commodities. Many people fear that’s just what China will do.

However, when China had a chance to raise interest rates recently, the bureaucrats in Beijing blinked — and just hiked reserve requirements instead, about the least effective thing they could do, and with the least effect on commodity demand.

The big driver of inflation in China is food inflation, which jumped a stunning 11.7% in November from a year earlier. In a bid to keep prices lower, China Grain Reserves Corp., the state food reserves manager, sold 1.5 million metric tons of wheat at cost to the nation’s biggest flour supplier in exchange for the company’s agreement to lower retail prices.

What’s the cure for high food prices? If you can’t grow more food, you have to import more food! Look for China’s imports of U.S. grains to shift into overdrive in 2011.

So, as we all snuggle in for the holidays, I’m taking some time to pick my favorite stocks and funds to ride what should be a continued commodity bull market in 2011 … a bull market that should get even hotter thanks to increasing Chinese demand.

Have a Merry Christmas and a happy holiday. I hope you had a great year in commodities; next year could be even better.

All the best,


This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules