LONDON, March 1: Oil, gold and tin prices soared to historic highs this week on buoyant demand for commodities on the back of a sliding dollar.
The flood of funds into the commodity markets since the beginning of the year has been relentless, said Helen Henton, head of commodity research at Standard Chartered.
Investors are apparently shrugging off downside growth risks and instead focusing on the inflation prospects, tight (supply/demand) fundamentals for some commodities and dollar weakness.
OIL: Oil prices charted fresh record territory Friday, rising to $103.05 per barrel as the US currency fell to all-time lows against the euro.
Oil’s rally was part of a broad-based commodities run based on the continued weakness of the dollar, said Petromatrix analyst Olivier Jakob.
A weak US currency boosts demand for dollar-denominated raw materials such as oil because it makes them cheaper for buyers using stronger currencies. The increased demand, if it outstrips the fall in the currency, leads to higher prices.
There is good support for oil futures with the weak dollar, geopolitical tensions, fund interest and OPEC’s (stance on) ... supplies, said Sucden analyst Andrey Kryuchenkov.
Nevertheless, persistent economic fears and more risk aversion could trigger a correction ... as investors still fear that slower growth in the US could weigh on global growth estimates and dent demand for energy, he added.
Opec, which pumps 40 per cent of the world’s oil, was unlikely to change its production level at a meeting next week should crude prices remain around 100 dollars, acting Libyan Oil Minister Chukri Ghanem told AFP on Friday.
The Organisation of Petroleum Exporting Countries, comprising 13 countries including Libya, was to meet in Vienna on Wednesday to reconsider its production ceiling of 29.67 million barrels per day, excluding output by Iraq.
Key Opec members Iran and Venezuela have called for the cartel to cut output ahead of an expected drop in demand during the second quarter with the end of the northern hemisphere winter.
According to analysts, their support for a cut has contributed heavily to oil’s push to record heights this week.
By Friday, New York’s main oil futures contract, light sweet crude for delivery in April, had soared to $102.07 per barrel from$97.52 a week earlier.
Brent North Sea crude for April jumped to $100.40 from $95.94.
GOLD AND SILVER: The price of gold rose to a record high $976.32 per ounce on Friday.It does appear that the scale of demand is sufficient to propel gold to $1,000 per ounce, said James Moore of the LondonBullion Desk.com.
Silver struck a fresh 27-year high in reaching $19.95 per ounce.
On the London Bullion Market, gold climbed to $971.50 per ounce at Friday’s late fixing from $943 a week earlier.
Silver rose to $19.62 per ounce from $17.94.
PLATINUM AND PALLADIUM: Platinum eased after striking an historic high of $2,206 per ounce the previous week.
The white metal faces a tight supply situation because South Africa, which produces about 75 per cent of the world’s platinum, is in the grips of a power crisis that has badly hit the country’s mining industry.
In recent months, South African production of platinum has also been severely hampered by accidents and a miners’ strike.
Platinum’s sister metal palladium, which has also been affected by the South African situation, hit a six-year high of $585.50 per ounce this week.
On the London Platinum and Palladium Market, platinum dipped to $2,150 per ounce at the late fixing Friday from $2,155 a week earlier.
Palladium advanced to $568 per ounce from $506.
BASE METALS: The price of tin struck an historic peak as the base metal was bolstered by high demand and tight global supplies.
On the London Metal Exchange (LME) Thursday, the price of tin for delivery in three months reached $18,900 per ton -- the highest point since 1989 when it was re-introduced on the London market.
We have been positive on tin price prospects for a while now ... on the back of the market’s tight fundamentals, wrote Barclays Capital analysts.
LME tin stocks continue to hover close to their lowest levels since June 2007.The market was also supported by supply outages in key producer Indonesia, which is the world’s second largest producer after China.
Tin prices have risen by more than 35 per cent over the past 12 months.
By Friday, copper for delivery in three months had climbed to $8,492.50 per ton on the London Metal Exchange from $8,325 a week earlier.
Three-month aluminium rose to $3,120 per ton from $2,917.
Three-month nickel gained to $31,905 per ton from $28,525 .
Three-month lead increased to $3,370 per ton from $3,260.
Three-month zinc grew to $2,750.15 per ton from $2,490.
Three-month tin rallied to $18,711.50 per ton from $17,550.
GRAINS AND SOYA: The price of soya rose above $15 for the first time, while wheat hit a record high above $13 per bushel before profit-taking set in.
Strength in oil prices and weakness in the dollar were pushing up agricultural commodities, said AG Edwards analyst Bill Nelson.
Maize and soya are used to produce ethanol, a clean plant-based fuel, which is also cheaper than crude oil.
By Friday on the Chicago Board of Trade, wheat for May delivery had risen to $11.08 per bushel from $10.65 the previous week.
May-dated soyabean meal -- used in animal feed -- jumped to $15.24 from $14.38.
The price of maize for May delivery gained to $5.57 per bushel from $5.35 a week earlier.
On LIFFE, the price per ton of wheat for November delivery increased to 158.75 pounds from 155.50 pounds a week earlier.
COCOA: Cocoa prices reached fresh multi-year peaks in London and New York on strong fund buying.
By Friday on LIFFE, London’s futures exchange, the price of cocoa for May delivery had rallied to 1,425 pounds per ton from 1,324 pounds a week earlier.
On the New York Board of Trade (NYBOT), the May cocoa contract jumped to $2,779 per ton from 2,567 a week earlier.
COFFEE: Coffee prices made impressive gains.
By Friday on LIFFE, Robusta for May delivery had spiked to $2,770 per ton from $2,504 a week earlier.
On the NYBOT, Arabica for May delivery increased to 167.40 US cents per pound from 162.30 cents.
SUGAR: Sugar prices gained ground on heavy fund buying.
By Friday on LIFFE, the price per ton of white sugar for May delivery rose to 386 pounds from 376 pounds a week earlier.
On NYBOT, the price of unrefined sugar for May delivery increased to 14.99 US cents per pound from 14.35 cents.
RUBBER: The price of rubber fell on profit-taking.
By Friday, the Malaysian Rubber Board’s benchmark SMR20 had fallen to 269.10 US cents per kilo from 277.40 a week ago.---AFP
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