October 28, 2001	Sunday	Shaba'an 10, 1422

LONDON, Oct 27: Oil prices pulled away from two-year low points but remained weak, as the market began to wonder whether Opec might agree another output cutback next month.

Dire predictions of price warfare and five-dollar oil from Venezuelan President Hugo Chavez met with scepticism in the market, where dealers are more inclined to think that producers will instead ultimately work together to support prices.

Gold remained stuck below $280 an ounce, depressed by dollar strength and signs of stock market recovery. But base metals found little to cheer about in dismal economic data which left demand for such raw materials at rock bottom.

GOLD: Gold prices remained stuck below 280 dollars an ounce, as the strength of the US stock market and the imperviousness of the dollar worked against the precious metal.

By Friday afternoon, an ounce of gold stood at $277.25, from $279.15 a week earlier.

The markets generally sustain the view that this year’s series of rate cuts from the Fed will combine with the proposed fiscal stimulus to put the American economy into a higher gear next year, said Rhona O’Connell of the World Gold Council.

The implication is that a stronger economic performance will reduce the need for investors to seek out safe havens such as gold.

SILVER: Silver prices moved sideways, as demand stayed thin and the precious metals complex remained under pressure.

An ounce of silver was going for $4.205 on Friday afternoon, from $4.24 the previous week.

PALLADIUM AND PLATINUM: Trading was quiet in the platinum group metals, with platinum under pressure as lease rates fell sharply while palladium continued to languish close to two-year lows.

By Friday, palladium was quoted at $328 an ounce from $322 the previous week. At the start of the year it fetched more than $1,000 an ounce.

When it was up at 1,000 dollars the economy was booming, but now we have seen a slowdown so that car companies which are a big user of palladium have not needed to buy as much and are living off stocks and the electronics industry have moved out of palladium because of the high price, said one London-based PGM dealer.

Platinum prices fell to $418 an ounce from $433 a week earlier.

Lease rates have eased, said the London dealer. They were over 30 per cent a week ago, and now they have come down to around 10 per cent, due to a combination of factors. And as lease rates come down, so do prices.

BASE METALS: The base metals complex has sagged heavily in recent months as the global economy endures a downturn, and there were few signs of a turnaround this week.

The reluctance of the European Central Bank (ECB) to cut interest rates also preyed on base metals, though the downside was limited by the fact that many metals are already at low points not seen for months if not years.

Copper prices fell further despite an announcement of an output cut by US mine Phelps Dodge. Three-month prices slid as low as $1,369 a ton before recovering to $1,399 by Friday afternoon, from $1,381 a week earlier.

The rest of the base metals managed to hold up reasonably well, with lead supported by nearby tightness and aluminium reluctant to stray too far away from $1,300 a ton, said Lawrence Eagles, a commodities expert with the GNI brokerage.

The three-month aluminium price was quoted at $1,303 a ton on Friday afternoon from $1,288 the previous week.

Nickel remained under pressure for largely technical reasons, falling to $4,550 a ton from $4,660 a week earlier.

Elsewhere, lead gained two dollars to $486 a ton, zinc added $18 to $785 a ton, and tin fell $25 to $3,830 a ton.

OIL: Oil prices continued to flirt with two year lows this week before ebbing slightly higher towards the weekend as the market kept a close eye on the Organization of Petroleum Exporting Countries (Opec) and its bid to shore up slumping prices.

Brent North Sea crude for December delivery was quoted as $21.16 a barrel on Friday afternoon, from $20.85 a week earlier.

In New York, December-dated light sweet crude futures stood at $22.07 from $22.00 the previous Friday.

Some members are murmuring about a cut of up to one million barrels a day, but the official position of big gun Saudi Arabia remains unclear.

But few in the market believed such a black prediction.

RUBBER: Rubber prices lost more ground this week on a market depressed at US economic prospects, particularly after dire economic data on durable goods orders.

In Kuala Lumpur, the RSS index ended Thursday at 2.115 ringgit per kilo from 2.125 ringgit the previous week.

COCOA: Cocoa prices fell this week as west African producers sold forward produce, though in the long term dealers still expect a supply shortfall to keep prices buoyant.

COFFEE: After a brief respite last week, coffee prices resumed their downward trend, depressed by a surfeit of volume on the market.

On LIFFE, Robusta quality for November fell to $396 a ton on Thursday from $407 the previous week.

SUGAR: Sugar prices moved up this week, particularly in London, where prices improved quite sharply on the back of fund short covering and on continuing reports that the European beet crop is going to be pretty bad, said Doug Nicolson of the Sucden brokerage.

Sugar beets suffered from poor weather conditions last winter and spring, and the harvest looks particularly bad in Poland, where it could drop by 33 per cent, Nicolson said.

In the United States, unrefined sugar prices remained weak on the back of sales by producer countries such as Brazil, Cuba, and Thailand, he added.

On the LIFFE market in London, a tonne of white sugar for March delivery rose to $224.50 from 211.80 a week earlier.

On the CSCE in New York, a pound of unrefined sugar for March increased to 6.79 cents on Thursday from 6.56 cents the previous week.

SOYA: Soya prices lost ground in Chicago, although they tried to rally towards the end of the week as US exports picked up.

Soya should also benefit from fears of damage to harvests by strong winds and hail in the US.

On the Chicago Board of Trade (CBoT), a bushel of soya for November delivery fell to $4.275 a bushel from $4.310 the previous week.

Soyabean meal — used in animal feed — for December delivery picked up to $159.30 a ton from $157.90.

GRAINS: Grain prices staged a modest rebound, encouraged by strong US exports.

The United States sold 703,400 tons of wheat last week, a 65 per cent increase over the previous period, and 903,200 tons of corn, up 11 per cent, according to weekly figures from the US Department of Agriculture.

Corn also benefited from bad weather in producing regions, notably strong winds and hailstorms that could damage harvests.

But world grain production in 2001-2002 has been revised upwards to 1.445 billion tons from 1.440 billion estimated in September.

Good weather spurred output of wheat and corn in several countries, according to the monthly publication of the International Grains Council here.

For this year, the council has maintained its prediction that grains consumption will reach 1.497 billion tons.

World grain reserves in 2001-2002 have been revised upwards to 268 million tons from 261 million foreseen in September. They stood at 319 million tons in 2000-2001.

On the LIFFE, the London futures market, the price of a ton of wheat for November delivery rose to 76 pounds sterling from 74.50 pounds last Thursday.

COTTON: The deterioration in price continued during the week, hitting lows not seen in 15 years in the United States in a market burdened by substantial stocks and prospects for a record US harvest.

The market continues to be oppressed by massive oversupply and steadily falling international prices, said the Refco brokerage house.

The US harvest, according to the latest Department of Agriculture report, should hit a record 20.072 million bales while world stocks swell to 43.26 million bales, equalling nearly half the global harvest.

In New York the December contract fell to 28.77 cents a pound from 31.18 cents a pound last Thursday.

The Cotton Outlook Index of physical cotton, the average of the world’s lowest prices, dipped to 35.95 cents from 36.90 last week.

WOOL: Prices in Australia firmed slightly in response to a shortage of lower quality wool.

Strong Chinese demand for such wool prompted a rebound in prices, according to market sources.

The Eastern index edged up to 698 Australian cents a kilo from from 694 cents last week.

The British Wooltops index was unchanged at 327 pence compared to last week. —AFP