Commodity prices retreat on economic strains
LONDON, Oct 20: Commodity prices mainly retreated this week, pressured by a tough economic climate highlighted in part by weakening growth in the world’s second biggest economy China, according to market watchers.
Heading into the weekend, all eyes were on the EU, whose leaders on Friday agreed to police thousands of eurozone banks beginning next year as they sought to boost growth in their austerity-battered economies.
By the close of a two-day summit, France and Germany had patched up differences over how to beat the debt crisis, although the new watchdog for 6,000 banks will come too late to re-float Spanish lenders via a dedicated rescue fund.
Oil: Crude prices came under pressure from official data that revealed slowing economic growth in China, the world’s biggest energy consumer, which added to weak oil demand in the US, traders said. China’s economic growth eased for the seventh straight quarter, official data showed on Thursday, but analysts said the slowdown had almost bottomed out.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in December stood at $112.82 a barrel compared with $114.73 for the expired November contract a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for November dipped to $92.08 a barrel, from $92.24 a week earlier.
Precious metals: Prices retreated, mirroring sentiment across many commodity markets, but analysts said gold was set to win fresh support over the next few months.
“We suspect that further gains for gold will require a new catalyst as the US dollar recovers more ground and inflation expectations drop back,” said Julian Jessop, economist at Capital Economics research group.
Silver fell to $33.33 an ounce from $33.79.
On the London Platinum and Palladium Market, platinum decreased to $1,633 an ounce from $1,678.
Palladium reversed to $638 an ounce from $650.
Base metals: Base or industrial metals declined across the board as traders digested weak Chinese numbers. Also this week, the head of the London Metal Exchange (LME), Martin Abbott, said he was hopeful of completing his group’s takeover by the Hong Kong stock exchange by the end of 2012.
Hong Kong Exchanges and Clearing (HKEx) agreed to buy the 135-year-old LME in June, when it was valued at £1.39 billion.
“We will be legally owned by the HKEx hopefully by the end of this year” following approval by regulators, chief executive Abbott told LME Week — a key annual event in the global metals industry calendar.
The HKEx has said its purchase of the LME — the world’s largest exchange trading nonferrous metals, including copper and aluminium — will boost its role as the bridge between China and international markets.
HKEx chief executive Charles Li on Monday said that a review into warehouse storage was ongoing amid market concerns that consumers were facing delays to deliveries of metals traded on the LME.
Abbott added: “We implemented changes last April on delivery obligations, we started a review, we are now in the process of this review. We’re not going to say anything for some time on what we will or will not do.”
By late on Friday on the London Metal Exchange, copper for delivery in three months decreased to $8,115 a ton from $8,168 a week earlier.
Three-month aluminium fell to $1,997 a ton from $2,002.
Three-month lead dropped to $2,142 a ton from $2,156.
Three-month tin declined to $21,650 a ton from $21,676.
Three-month nickel slid to $17,080 a ton from $17,290.
Three-month zinc sank to $1,905 a ton from $1,937.
Cocoa: Prices rebounded from three-month low points despite data pointing to falling demand for chocolate in key markets the US and Europe.
Cocoa futures had fallen the previous week on receding supply worries in top global producer Ivory Coast. The European Cocoa Association this week said that cocoa grindings — or the powdered form of the commodity used to make chocolate — slumped 16.2 per cent during the third quarter of 2012 from the same period a year earlier.
“This represents the lowest third-quarter figure for seven years. The second quarter had already seen a considerable year-on-year decline,” said analyst Fritsch. However, the weak data had already been priced in by markets.
“The weak data were broadly in line with market expectations as consumer sentiment has been hit by an increase in economic uncertainty associated with the eurozone sovereign debt crisis,” Barclays Capital said in a research note.
“Despite the unfavourable economic environment, we forecast cocoa grinding demand growth due to strong demand in emerging markets,” it added.
By Friday on LIFFE, London’s futures exchange, cocoa for delivery in December climbed to £1,608 a ton from £1,524 a week earlier.
On New York’s NYBOT-ICE exchange, cocoa for December grew to $2,483 a ton from $2,360.
Sugar: Futures extended recent losses, with white sugar reaching a 26-month low of $537 a ton on Friday.
By Friday on NYBOT-ICE, the price of unrefined sugar for March declined to 19.76 US cents a pound from 20.47 cents the previous week.
On LIFFE, the price of a ton of white sugar for delivery in December slipped to $539.50 from $566 a week earlier.
Coffee: Coffee prices dipped on easing supply worries.
“Supply concerns subside in the near-term as Colombian production prospects remain optimistic,” Societe Generale analyst Christopher Narayanan said in a note to clients.
By Friday on NYBOT-ICE, Arabica for delivery in December fell to 159.25 US cents a pound from 160.70 cents a week earlier.
On LIFFE, Robusta for November slipped to $2,042 a ton from $2,060.
Grains and soy: Maize, wheat and soy prices all rose as a weaker dollar boosted demand abroad, traders said.
By Friday on the Chicago Board of Trade, maize for delivery in December grew to $7.67 a bushel from $7.52 a week earlier.
November-dated soybean meal — used in animal feed — climbed to $15.42 a bushel from $15.22. Wheat for December increased to $8.82 a bushel from $8.56.
Rubber: Prices extended recent losses amid a slowdown to Chinese imports, traders said.
The Malaysian Rubber Board’s benchmark SMR20 dropped to 293.55 US cents a kilo from 302.80 cents the previous week. —AFP