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LONDON, Feb 15: Oil prices rode up to their highest level in more than two years this week as a key report by chief UN weapons inspectors did lit tle to lift the war clouds hanging over Baghdad.
World commodity markets were on tenterhooks all week ahead of Blix’s report, which markets feared could pave the way for a war in Iraq.
But the oil market notably gave a muted initial response as Blix appeared to buy more time for inspections.
Gold prices slumped off recent six and a half year highs as traders locked in profits from the recent steep gains fueled by safe-haven flows owing to war worries.
Platinum failed to follow gold’s lead, hitting new 23-year highs, amid concerns over the metal’s availability in light of supply disruption in South Africa and because of a labour dispute at Norilsk Nickel in Russia.
Base metal prices were also weaker however with fears that a war in the Middle East would hit global output and industrial demand pressuring copper and aluminium prices in particular.
GOLD: Gold prices slumped off recent six and a half year highs as traders locked in profits from the recent vertiginous gains fueled by safe-haven flows triggered by economic and war worries.
By Friday afternoon, the precious metal was trading at $354.25 per ounce on Friday on the London Bullion Market, down from $373.25 the previous week.
Gold pulled back because of some profit taking, especially by US funds, said Barclays Capital analyst Ingrid Sternby.
There was not much profit taking but it had a huge impact anyway given that the gold market is a very small market with few trades compared to equity or financial markets, she added.
But she noted that the price of the precious metal had pared losses late in the week as nervousness mounted ahead of the UN arms inspectors report.
Gold prices will remain firm in the near term, she added.
SILVER: Prices fell in step with gold.
Silver was trading on the London Bullion Market at $4.53 an ounce on Friday afternoon against $4.71 the previous week.
The industrial metal is continuing to suffer from a lack of genuine buying to support it and the recent dip in gold has underlined its recent reliance on speculative interest, said James Moore, analyst at TheBullionDesk.com specialist website.
PLATINUM AND PALLADIUM: The platinum group metals bucked the weaker tone on other precious metals markets thanks to a brightening demand outlook for platinum, supply worries and speculative demand.
Platinum is looking very strong on the back of strong fundamentals and renewed speculative interest into this metal, said Sternby.
There are still concerns for the short-term over the metal’s availability in light of supply disruption in South Africa and because of the labour dispute at Norilsk Nickel in Russia, she added.
Analysts say the spike in the platinum price could boost palladium prices if users switch to the sister metal.
Palladium remains largely unchanged but may benefit from fresh industrial interest from various sectors if platinum climbs above $700 again, said Moore.
On Friday, an ounce of platinum stood at $695 on the London Platinum and Palladium Market from 689 dollars the previous week.
Palladium prices traded at $256 per ounce from $252.
COCOA: Cocoa prices pushed higher as traders remained nervous about unrest in Ivory Coast despite peace talks between the country’s new Prime Minister Seydou Diarra and rebels.
News that rebels had agreed to meet in Accra with Prime Minister Seydou Diarra eased some tensions briefly, though the Ivory Coast situation remains shaky, said Refco analyst Ann Prendergast.
Diarra, accompanied by Mohamed Ibn Chambas, executive secretary of the 15-nation Economic Community of West African States (ECOWAS), which has sought to broker an end to the war, arrived in the Ghanaian capital Accra Friday.
A three-member rebel delegation, headed by Guillaume Soro of the main Ivory Coast Patriotic Movement (MPCI) force holding the northern half of the country s ince September 19, arrived shortly afterwards.
On LIFFE, London’s financial futures exchange, the price of cocoa for May delivery rose to 1,459 pounds a ton on Thursday from 1,424 the previous week.
On the CSCE, the New York futures market, the May contract inched up to $2,278 per ton from $2,275.
COFFEE: Coffee futures retreated on investment fund selling.
On LIFFE, Robusta quality for May delivery fell to $818 per ton against $891 the previous week.
On New York’s CSCE market, Arabica for May delivery dropped to 61.70 cents a pound on Thursday from 65.65 cents the previous week.
Among the factors affecting the market were rumours that the Brazil 2003/04 crop will come in considerably larger than the official forecast for 27.9-20.9 million bags, said Prendergast.
SUGAR: Sugar prices fell back on profit taking after roaring up to their highest level in 19 months early in the week.
Czarnikow analyst John Kovaks said prices had fallen sharply after hitting new highs because investment funds had opted to book profits.
Kovaks added that prices were expected to fall further in coming days as profit taking continued.
Sugar prices have risen sharply in recent weeks on worries over the size of Brazilian exports which some experts believe could be set to fall by as much as two million tonnes in 2003/04.
On LIFFE, a ton of white sugar for May delivery slipped to $234.50 on Thursday from $234.70 a week earlier.
On the CSCE in New York, a pound of unrefined sugar for March delivery fell to 8.65 cents from 8.87 cents the previous week.
SOYA: US soya prices surged, despite widespread weakness in cereal prices, buoyed by worries that rainfall in Brazil will delay the harvesting of this year’s crop which is expected to total 51 million tons.
Allendale analyst Joe Victor said the market had also shrugged off China’s decision to accelerate plans authorising the importation of Brazilian soya which is likely to reduce demand for the US crop.
And disappointing US weekly export figures had also had little impact, he said, since the market believed demand remained firm in both the United States and elsewhere.
The US agriculture department’s weekly soya exports figures showed soya exports fell 21 per cent from a week earlier.
On the Chicago Board of Trade (CBoT), a bushel of soya for March delivery rose to 571.75 cents from 562.5 the previous week.
Soyabean meal — used in animal feed — for March delivery rallied to $177.60 per ton from 168.50 the previous week.
GRAINS: Grain prices were mixed with wheat prices edging lower while maize prices moved up a notch.
Wheat prices were hit after the US agriculture department (USDA) estimated that US stocks had risen by more than expected at the end of the 2002/03 season, said ED and F Man International analyst Steve Bruce.
Allendale analyst Joe Victor added that rainfall in the US Midwest, which has been suffering from an abnormally dry period, further weighed on prices.
Maize prices by contrast were boosted by strong US export inspection figures.
The USDA estimated that wheat consignments ready for export totalling 822,960 tons had been inspected in the latest week, compared with expectations for 558,800 tons.
In Chicago a bushel of wheat for March delivery fell to 326.50 cents on Thursday from 327 cents a week earlier.
A bushel of maize in Chicago for March delivery climbed to 239.75 cents from 239 the previous week.
On LIFFE, the price of a ton of wheat for March delivery fell to 64.10 pounds from 64.50 a week earlier.
COTTON: Cotton prices ticked higher, reaching their highest level in 21 months on Tuesday before data showing disappointing US sales figures spark ed profit taking.
International prices remain supportive, but we still believe that the heavily long speculative position will weigh on the market and possibly curtail any upside momentum, said Refco analyst Ann Prendergast.
She added that while weekly figures from the US agriculture depratment were “not bad”, sales had come in at the lower end of expectations.
In New York, the May contract rose to 56.38 cents a pound on Thursday from 55.74 the previous week.
The Cotton Outlook Index of physical cotton, the average of the world’s lowest prices, climbed to 58.70 cents from 57.60.
WOOL: Australian wool prices slipped back in choppy trade as one major trade buyer reduced the size of their purchases.
Nonetheless the Australian Wool Industries Secretariat (AWIS) reported that Italian customers were good buyers of fine wool.
Also noticeable, was some activity in the fine wools from buyers for China. As usual, topmakers were significant buyers, AWIS added.
It went on to state that next week’s sale were likely to be the largest since sales resumed after Christmas.
The Australian Eastern index slipped to 11.56 Australian dollars per kilo from 11.62 the previous week.
The British Wooltops index was unchanged at 572 pence.—AFP
