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Cocoa prices continued to rise for the fifth week in a row, as concerns mounted about stoppages to supplies from Ivory Coast, the world’s leading producer, which is in the midst of a three-month old war. Cocoa production is expected to fall.
On LIFFE, London’s financial futures exchange the price of cocoa for May delivery climbed to 1353 pounds a tonne on December 20, from 1347 pounds the previous week. On the CSCE, the New York futures market, the may contract surged to $2058 per tonne from $2015.
The prospect of a war in Iraq, weakness of the dollar, and the resurgent interest from investment funds sent gold prices to levels net seen since March 1997. Spot gold prices reached as high as $354 an ounce on December 19, as geopolitical worries sent investors fleeing for safe havens.
There has been a sharp weakening of the US dollar since the beginning of December, down four per cent against the euro and two per cent in general.
The dollar has lost a lot of its safe heaven status and it is coming back, as it used to be 20-30 years ago to gold, says an analyst at the SG Securities.
In London market, the crude oil prices traded close to two-year highs on December 24, the US light crude hit a peak of $32 a barrel, its highest since January 2001 and was last at $31.81, up six cents.
Brent crude for February delivery was seven cents higher at $29.79 a barrel.
The prospect of a war in Iraq sent oil prices soaring and the strike in Venezuela entered a third week, cutting off oil exports and adding to concerns about the outlook for global oil supplies.
Iraq exports roughly two million barrels a day of crude oil, and is the sixth largest supplier to the United States. The government attempts to break the strike in Venezuela the world’s fifth largest exporter have failed.
Opec exporters have sought to contain prices by pledging to fill any supply gap left by the Venezuelan outage or a war on Iraq. Group ministers said recently they saw no signs of any real shortage on world markets yet but most want to partially reverse a recently agreed output curb if prices stay high.
Opec, which pumps about two-thirds of world exports, has sufficient spare capacity to replace either Venezuelan or Iraqi exports.
But analysts said the unlikely scenario of a simultaneous halt in both countries would test the group’s spare capacity, held mostly by Saudi.
Worries over global oil supplies were heightened by a national strike in Venezuela which entered its third week, having paralysed the country’s oil industry. Crude production in Venezuela is down to 200,000 barrels a day, an oil company manager taking part in a general strike said on December 18, giving a far lower estimate than the government.
“Production at this moment is of 200,000 barrels,” said Juan Fernandez, a spokesman for striking Petroleos de Venezuela managers.
The head of the state oil company, Ali Rodriguez, for his part said output was down to a third of its normal levels. Venezuela, the fifth-largest oil exporters, usually produces 2.8 million barrels of oil a day, of which 2.5 million barrels are exported.
