May 18, 2003	Sunday	Rabi-ul-Awwal 15, 1424

LONDON, May 17: Global commodities prices cashed in on recent dollar weakness again this week as buyers in Europe and Asia took advantage of their stronger currencies to snap up dollar-denominated raw materials.

Commodities prices are showing broad strength, with oil, gold and base metals all moving higher in recent weeks as dollar weakness extends, said Barclays Capital analyst Ingrid Sternby.

GOLD: Gold prices rose on the back of the softer dollar and renewed fears about global terrorism in the wake of deadly suicide blasts in Saudi Arabia said to bear the hallmarks of an al-Qaeda attack.

By Friday afternoon, gold stood at $355.0 per ounce on the London Bullion Market from $347.90 the previous week.

Gold is the most obvious beneficiary of a weak dollar as a result of its historic and perceived negative correlation with the dollar, said Sternby.

James Moore, analyst at the specialist website TheBullionDesk.com, added that worries about global security were also coming back into play.

Support still remains strong between $348-52 as rising fears of further terror attacks are likely to lead to some safe haven buying as some carriers suspend flights to Kenya while the US warns of further attacks in Saudi Arabia.

SILVER: Silver prices also had another good week.

Silver was trading on the London Bullion Market at $4,790 an ounce on Friday against 4.780 dollars the previous week.

Silver remains at the top of its recent $4.70-80 range, strong fund interest remaining the main driver, but has failed to break higher as the metal’s poor fundamentals continue to hamper climbs, said Moore.

PLATINUM AND PALLADIUM: Platinum prices extended their recent rally, reaching two-month highs on the back of speculative buying.

On Friday, the price of an ounce of platinum stood at $663 from $642 the week before, showing a gain of almost 10 per cent over two weeks.

Platinum price has increased significantly over the last days, primarily because of speculative buying, said Barclays Capital analyst Matt Schwab.

But the rally was unlikely to last much longer, particularly in the face of worries about the impact of the SARS virus on China, which accounts for over 25 percent of world platinum demand, he added.

The last platinum run-up above $700 an ounce was based on real demand out of China rather than on speculative buying.

As long as the consumers and especially the auto companies remain quiet, it is unlikely that prices are going to be sustained up here, he said.

Palladium traded at $158 against $155 the previous week.

Palladium remains quiet and is likely to trade (around) $140-160 for some time although longer term prospects for the industrial metal are still poor due to rising supplies and falling demand, said Moore.

BASE METALS: Base metal prices forged higher again on the back of recent dollar weakness which lured in non-US buyers and raised the prospect of production cuts.

Sternby at Barclays Capital estimates that while the dollar has fallen by about 10-per cent from its 2002 peak on a trade-weighted basis, base metals have gained by an equal amount over the same period.

Weakness of the dollar is having an overall benefical influence on the London Metals Exchange and currently represents a key rare positive in an otherwise depressed surrounding, she wrote in a research note.

Recent dollar weakness has triggered a degree of opportunistic physical buying, particularly in Europe and Japan, and has put further pressure on production costs (as US dollar depreciation means higher local costs) — increasing the risk for production cuts in already adverse environment for producers.

On the London Metal Exchange (LME), three-month copper prices advanced to $1,674 per ton on Friday from $1,625 the previous week.

Three-month aluminium prices gained to $1,404 per ton from $1,393.

Three-month nickel prices increased to $8,350 per ton from $8,180.

Three-month tin prices rose to $4,785 per ton from $4,740.

Three-month lead prices firmed to $470 per ton from $469.

Three-month zinc prices climbed to $798 per ton from $771.

OIL: Oil prices climbed on a report suggesting that global oil stocks are at a 20-year nadir.

The price of benchmark Brent North Sea crude oil for July delivery increased to $25.85 a barrel in late London trading on Friday from $25.04 a week earlier.

In New York, reference June-dated light sweet crude futures nudged up to $28.65 per barrel from $27.60 the previous week.

Prices climbed after the Paris-based International Energy Authority warned that oil inventories in industrialised countries have drained to a near 20-year low relative to normal levels.

The US Department of Energy (DoE) later announced that the country’s crude oil inventories had fallen by 2.7 million barrels, or 0.9 per cent, in the week to May 9 from the previous week.

That left them 12.5 per cent lower than the same period last year, the DoE said.

With concerns about oversupply easing, prices are likely to settle at the middle of the Opec oil cartel’s target range of $22-28 per barrel, said Commerzbank analyst Jon Rigby.

The last two sets of inventory data in the States have not showed the massive build that was expected. Also there is a lot of activity going on behind the scenes in preparation for the Opec meeting in June, he said.

The Organization of Petroleum Exporting Countries (Opec) is due to meet in Doha on June 11, with analysts pencilling in a cut in output quotas.

It is becoming clear that they are taking the matter seriously; there is a belief that they will act to maintain oil prices around $25, so prices will find this level, said Rigby.

RUBBER: Rubber prices were propelled higher by the weaker dollar and supply worries, though trading was muted in the second half of the week owing to holidays in several Asian producers.

In Kuala Lumpur, the RSS index rose to 3.530 ringgit per kilo from 3.475 the previous week.

COCOA: Cocoa prices plumbed fresh five-month lows on speculative selling and reports of a better-than-expected crop from violence-wracked Ivory Coast, the world’s biggest producer.

Technically, the market is on a downtrend and impervious to oversold signals, said Refco analyst Ann Prendergast.

COFFEE: Coffee prices slipped again on an easing of concerns about meteorological conditions in leading world producer Brazil.

The market has been down for a week and a half after frost failed to materialise out of cooler weather in Brazil and traders jerked the market up and down in a remorseless endeavor to seize control, said Prendergast.

On LIFFE, Robusta quality for July delivery slipped eased to $762 per ton, against $781 the previous week.

SUGAR: Sugar prices ticked higher in quiet trading.

The International Sugar Organization raised its forecast of the supply surplus for the production period of October 2002 to September 2003, to 3.308 million tons from 3.283 million predicted in February.

On LIFFE, a ton of white sugar for August delivery inched up to 203.50 dollars from 203.00 a week earlier.

SOYA: Soya prices advanced after the US agriculture department reported that exports of the crop had more than tripled in the week to May 8 from the previous week.

GRAINS: Grain prices also rose on the back of weekly US export figures, which are benefiting from the weaker dollar, traders said.

US wheat exports increased by 21 per cent in the week to May 8 from the previous week, while maize exports leapt by 84 per cent.

COTTON: Cotton also received a fillip from weekly US export figures, which showed a 25-per cent rise.

In New York, the July contract nudged up to 53.98 cents a pound from 52.34 the previous week.

The Cotton Outlook Index of physical cotton, the average of the world’s lowest prices, advanced to 58.10 cents from 57.00 cents the week before.

WOOL: Wool prices in leading producer Australia continued to plunge amid a dearth of orders from China because of the outbreak of the SARS virus.

The Australian wool market went into freefall this week with prices dropping a further 9.7 per cent on average at sales in Sydney, Melbourne and Fremantle, the Australian Wool Industries Secretariat reported, noting that China remained out of the market.—AFP