It can be overvalued if there is a large demand for the commodity that is purely artificial.
No matter how inelastic the demand for any commodity, be it gasoline or tobacco, there are price points where usage declines fairly rapidly.
India's large population means that even a small increase in coffee consumption by individuals can affect global supply and demand for the commodity.
His first venture was selling medical equipment, before switching to trading precious metals, as well as wine, when demand for that commodity boomed in China.
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This trade has done a marvelous job of driving up those prices well beyond what would make sense if prices were set solely on the basis of supply and demand for the commodity.
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In the current scenario, it makes perfect sense for the company to focus on the more profitable oil drilling, however, we see enough upside for natural gas price and a robust demand for the commodity going forward.
Chinese demand for all things commodity based is one of the main reasons for price inflation in a number of these products.
Raising its guidance for aluminum demand next year is a positive sign for major commodity producers and other firms connected to the sector, including Caterpillar, U.S. Steel, and Deere.
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Moreover, growth in the global economy is causing continued demand for commodities, resulting in commodity price increases.
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In part, these woes reflect fears that China's demand for commodities, and hence commodity prices, will falter.
And while that holds a host of problems for things like commodity demand, China is still building.
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Sharp declines in commodity prices and demand for metals have led Kazakhstan's big mining companies to cut production and send thousands of workers on leave at half-pay.
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Declining commodity prices usually indicate demand for goods is dropping and the economy is in trouble.
The major technical trend for the majority of the commodity markets is still positive, as is the global demand outlook for commodities.
And Chinese demand for raw materials, that's driving commodity market at the moment.
All are suffering from a bout of inflation, due to stronger currencies, high domestic demand for real estate and services, and rising commodity prices.
Throughout his political career, Gore was a one-man calamity for agricultural innovations that could reduce greenhouse gas emissions and for an agricultural commodity supply-demand balance that would keep food prices low.
China's textile mills are importing more cotton than many had expected, and the demand is helping to give the global market for the commodity a boost.
Indonesia enjoys a big cost advantage over its main competitor, Malaysia, as it does over Australia in coal for power stations, another commodity where demand, led by China and India, is expected to grow hugely.
The commodity story of China being the demand force for oil, minerals like iron ore and agricultural commodities is still in play, but savvy fund managers are turning inward along with the Chinese government.
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The China news is a bullish underlying factor for the raw commodity sector, due to the demand implications.
However, it can also be argued that any improving U.S. and world economic growth prospects would be bullish for commodity markets due to increasing commercial and consumer demand.
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For example, there may have been some commodity-demand concerns brewing due to the demand destruction beginning to show up in oil (gasoline demand has dropped -2.3% over the past year) and the potential slowdown in places like China.
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China is the incremental buyer of industrial commodities (here is a factoid: it is responsible for two-thirds of global demand for iron ore), so even if we have inflation, commodity prices will still decline with plummeting demand when China cuts back.
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But if commodity demand is any indicator, the China dragon is still hungry for raw materials.
In my view, even if demand for commodities from Developed Markets softens for the balance of the year, demand for commodities from Emerging Markets should help to compensate and prevent any material reductions in commodity prices.
However demand for the material continues to strengthen around the world, making it a still very coveted commodity.
Commodity markets, already worried about what slowing global economies would do to demand for materials and supplies, reacted with further substantial declines.
Seed and agrichemical company Syngenta said that an increase in demand for crop enhancers and a growing emerging market presence helped to offset the difficult weather conditions and commodity price increases during its half-year reporting period that ended June 11.
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When asked whether the Fed policies are responsible for rising commodity prices, Chairman Bernanke replied that rising commodity prices have to do more with rising demand coming from fast growing emerging markets rather than from Fed policies.
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