Commodities rattled by supply woes, strong US dollar
LONDON, May 19: The prices of many raw materials, including crude oil, cocoa and coffee, jumped this week on concerns over tight supplies, but metals lost their shine as the US dollar strengthened.
Base metals slumped, with copper witnessing spectacular losses as investors took flight on fears about oversupply in economic powerhouse China.
Added to the picture, China raised its interest rates on Friday in a bid to rein in its runaway economy -- sparking some concern about the impact on Chinese demand for commodities.
GOLD: Gold prices fell.
Gold prices continued to weaken as the dollar firmed up against the euro said analysts at Barclays Capital.
A stronger US unit tends to crimp demand for dollar-denominated commodities, such as gold, as they become more expensive for buyers holding other currencies.
Gold sank to $654.3 an ounce on Thursday, the lowest level for two months.
On the London Bullion Market, gold slid to $657 an ounce at Friday's late fixing, from $669 a week earlier.
SILVER: Silver prices extended losses.
Silver tracked gold, said BNP Paribas analyst David Thurtell.
Gold's sister metal, used widely by the jewellery sector but also in the dentistry and photographic industries, saw its price slide beneath $13 per ounce.
On the London Bullion Market, silver prices fell to $12.87 an ounce at Friday's late fixing, from $13.04 a week earlier.
PALLADIUM AND PLATINUM: The prices of palladium and palladium finished with slight losses, but could move higher in the coming months.
While the platinum market is forecast to move further into surplus this year, strike actions (in key producers like South Africa) could disrupt supplies leading to increased market tightness and exposing prices to upside risk, Barclays Capital analysts said.
On the London Platinum and Palladium Market, platinum dipped to $1,308 an ounce at the late fixing Friday, from 1,324 a week earlier.
Palladium eased to $362 an ounce, from $363.
BASE METALS: Base metals took another sharp tumble.
Base metals suffered heavy losses ... with concerns about oversupply in China, said Michael Davies, analyst at the Sucden brokerage in London.
He added that copper prices sank on the back of concerns over Chinese demand, with investors worrying that imports to the world's top consumer could slow down.On Friday, three-month copper prices tumbled to 7,220 a ton on the London Metal Exchange, from $7,805 a week earlier.
Three-month aluminium prices fell to $2,815 a ton from $2,836.
Three-month nickel prices declined to $49,005 a ton from $50,200.
Three-month lead prices retreated to $2,020 a ton from $2,070.
Three-month zinc prices fell to $3,642 a ton from $3,995.
Three-month tin prices sank to $13,800 a ton from $13,900.
OIL: World oil prices posted strong gains owing to concerns over tight supplies amid weak output from US refineries and renewed unrest in Nigeria, the world's sixth biggest producer of oil.
The price of Brent crude hit the highest level for more than eight months in London trade on Friday, rising above $70 a barrel on concerns over tight supplies before recoiling on profit-taking.
Brent North Sea crude for July delivery shot up to $70.35, a price last seen on September 1, 2006.
New York's main oil futures contract, light sweet crude for delivery in June reached $65.64, the highest point since April 30.
Crude futures had surged by more than two dollars on Thursday as the market focused on problems at US refineries ahead of the high-demand season for motor fuel, and unrest in oil producer Nigeria.
With gasoline stocks at such a large deficit to year-ago levels and with refineries reporting production mishaps on nearly a daily basis, it is looking more and more doubtful that refiners will be able to lift gasoline supplies enough to meet growing demand, Man Financial analyst John Kilduff said.
Dealers said the market remained concerned whether US refineries could produce enough gasoline to satisfy demand when Americans take to the highways during the holiday driving season which begins in two weeks.
Traders were also tracking events in Nigeria, where recent rebel attacks on energy facilities have slashed output in the African nation by about one-quarter.
GRAINS AND SOYA: Grains and soya prices mainly rose as traders tracked changing weather patterns in key producing nations.
Next week, the main drivers will be the weekly (US government) reports and the weather, said Allendale analyst Joe Victor.
By Friday on the Chicago Board of Trade, the price of maize for July delivery rose to $3.77 a bushel, from $3.69 a week earlier.
Wheat for July delivery dropped to $4.87 a bushel, from $4.93.
July-dated soyabean meal used in animal feed -- climbed to $7.92, from $7.62.
On the LIFFE, London's futures exchange, the price per ton of wheat for November delivery gained to 99.00 pounds, from 98.25 pounds the previous week.
COCOA: Cocoa prices stablized close to a four-year peak in London.
Rains in Ivory Cost have calmed the market, Sucden analyst Michael Davies said.
Concerns over wet weather in leading consumer Ivory Coast, which is situated in west Africa, has underscored recent market gains.
By Friday on the LIFFE, the price of cocoa for July delivery gained to 1,086 pounds a ton, from 1,073 pounds a week earlier.
On the New York Board of Trade (NYBOT), the July contract increased to $1,954 a ton, from $1,931.
COFFEE: Coffee prices hit the highest level for about eight years in London on concerns over tight supplies.
The price of Robusta coffee surged as high as $1,735 per ton which was last seen at the start of 1999.
Prices have been increasing recently, because demand from roasters has been increasing while Vietnam -- the top Robusta producer -- has minimal supplies left to sell, Davies said.
By Friday on the LIFFE, Robusta quality for July delivery jumped to $1,725 a ton, compared with $1,640 a week earlier.
On the NYBOT, Arabica for July delivery gained to 112.10 US cents a pound, from 108.50 cents.
SUGAR: Sugar prices saw mixed fortunes as dealers mulled current and future production levels.
The sugar market continues to wrestle with ... current (supply) tightness and anticipated surplus, Fimat analyst James Cassidy said.
By Friday on the LIFFE, the price per ton of white sugar for August delivery firmed to $336, from $332.70 a week earlier.
On the NYBOT, the price of unrefined sugar for July delivery slipped to 8.67 US cents a pound, from 9.25 cents.
RUBBER: The price of rubber rose owing to tight supplies and rainy weather conditions.
In Thailand and in the northern part of Malaysia it has been raining heavily, so the prices are going up, said an official from a rubber production firm, wishing to remain anonymous.
On Friday, the Malaysian Rubber Board's benchmark SMR20 climbed to 215.50 US cents per kilogramme compared with 210.75 the previous week.
WOOL: The Australian wool market gained, with strong sales in Sydney, Melbourne and Fremantle.
It was a very good market. Rises were seen over all wool types and micron ranges, said the Australian Wool Industry Secretariat, adding that China remained dominant buyers.
The Australian wool market finished 1.8 per cent higher on average this week, with the Eastern Index ending at 9.80 Australian dollars a kilo -- marking a new season high point.
