0
Gold
Gold prices in the London market hit a six week high on September 4, helped by safe-haven buying and good physical demand, with investors awaiting the release of US economic data that may change bullion’s short term direction.
Gold rose to $679.90 an ounce, the highest since July 25. Gold has rebounded more than six per cent since falling to a seven week low of $641.10 in mid-August, when investors sold gold and other metals for cash to cover margin calls on losses arising from a meltdown in the US sub-prime mortgage market.
Gold production at the Lihir mine in Papua New Guinea, one of the nation’s largest gold mines has been interrupted by a strike.
Gold output in South Africa, the world’s biggest producer, fell 7.5 per cent in the second quarter from a year ago, while Russia produced 76.9 tonnes of gold in the first seven months of 2007, 1.9 per cent lower from last year.
Brisk seasonal demand from India, the world’s largest consumer, boosted physical trading in Asia and helped offset scrap sales. Gold imports to Turkey, jumped 40 per cent to 178 tonnes in the first eight months of the year.
Silver edged 0.5 per cent higher to $12.08 a troy ounce with sentiment remaining cautious after recent volatility. The market was fundamentally oversupplied and continued to carry high inventory levels while industrial consumers had reduced their entry price to the market to below $12 a troy ounce.
Platinum has risen to as high as $1275 an ounce. South African labour union, National Union of Metalworkers of SA (Numsa), said 1,500 workers at three of Anglo Platinum’s smelters and process divisions had downed tools. The company is the world’s biggest platinum producer.
In other news, Angloplat announced a 35 billion rand ($4.85 billion) empowerment deal to sell mines to two black-led companies and distribute shares to its mostly black workers. Palladium rose $2.80 to 330.80/334.80 an ounce.
Oil
Oil prices in the London market climbed above $74, as Opec kept a lid on output, in the run up to its September 11 ministerial meeting. London Brent crude was up 60 cents at $73.29.
Opec kept oil production restricted in August, a Reuters survey found, suggesting the exporter group is intent on retaining output curbs when it gathers this week in Vienna.
Consumer nations have been calling for more oil as the price climbs back towards its August 1 all-time high of $78.77. Oil analysts also say Opec must boost supplies to keep pace with growing demand this winter.
Opec has repeatedly said shortfalls of refined products are not its problem and the world is amply supplied with crude.
The 10 Opec countries subject to output restrictions — all except Iraq and new member Angola — kept production little changed at 26.74 million barrels per day (bpd) in August, the Reuters survey showed.
Total Opec supply fell because of a drop in Iraqi exports. The Organisation of the Petroleum Exporting Countries, source of more than a third of the world’s oil, agreed last year to lower production by 1.2 million bpd from November 1.
Meanwhile, a weekly US inventory report released early September has also lent support to oil futures. The data showed that gasoline supplies remain well below average and that crude stocks fell by more than the market had expected.
The Department of Energy said recently that US gasoline, or petrol, inventories dived by 3.6 million barrels last week, sharper than the forecasted 2.5 million barrels.
Motor fuel inventories remain far below normal levels as refiners in the United States have struggled to keep up during the peak demand of the holiday driving season, which began in May and wraps up this weekend with the Labour Day holiday.
Copper/Nickel
Copper fell 1.5 per cent to $7,385 a tonne amid reports that a ship carrying as much as 40,000 tonnes of the red metal had arrived in Shanghai, raising concerns that spot demand in China could be overwhelmed by the increase in supply. However, traders said the entire cargo was unlikely to be unloaded and noted that China imports around 120,000 tonnes of copper a month.
Nickel was almost unchanged at $29.835 a tonne, amid mounting evidence that the Asian stainless steel market is stabilizing. A number of Asian steelmakers have said they will cut production and raise prices, supporting nickel.
Nickel had risen earlier to hit a one month high of $30500 on renewed fund interest.
Wheat
Wheat prices broke new records on both sides of the Atlantic on September 5, forcing producers to increase bread prices.
Fears over possible export restrictions in Russia and growing concerns about the prospects for crops in the southern hemisphere were responsible for the price gains. Analysts in Australia predicted significantly lower production than the last official estimated of 22.5 million tones. Drought-like conditions [currently] are eerily similar to those of last year as we enter the critical crop heading stage when Australian wheat production was cut in half.
In Chicago, the September contract increased 44 cents to $8.11 a bushel, a record. The most active CBOT December wheat contract rose by its 30 cent daily trading limit to $8.05½ a bushel.
European wheat prices continued to trade at record level on September 4. French November milling wheat futures jumped 6.8 per cent to €285 a tonne, its highest price since the contract was launched in 1998.
Wheat’s strength dragged other soft commodity prices higher as farmers are expected to switch into cheaper alternatives for animal feed. CBOT September corn rose 9 cents to $3.33 a bushel with the more active December contract up 9½ cents to $3.49½ .
CBOT September soyabeans jumped 20¼ cents to $8.88¼ a bushel with the more active November contract up 21 cents to $9.03½. The most active soyameal contract, December 2007, rose 9.8 cents to $2.55½ a bushel.
The world is approaching a food crisis in 2008 unless usage of agricultural products is curbed or ideal weather conditions and sharply higher crop yields are achieved.
