Commodity prices retreat after oil hits record high
LONDON, May 3: World commodity markets mostly fell this week on easing concerns over tight supplies, a strengthening dollar and hopes that the worst of the global credit crisis was over, analysts said.
Oil futures slumped after reaching a record high of $119.93 per barrel on Monday.
Corn or maize prices also scored another historic peak because of poor weather conditions in major exporter the United States.
However, demand dampened for most dollar-denominated raw materials as a resurgent US currency made them more expensive for foreign buyers.
After a surge in commodities and commodity assets to records ... the market will look to rotate out of these sectors into those that have been beaten down and seem better value, including financials and consumer sectors, said ABN Amro analyst Greg Anderson.
He added that investors were moving away from investing in commodities now that the worst of the credit crisis appears past.
OIL: The price of oil tumbled after striking an all-time high of nearly $120 per barrel on Monday amid industry strikes in Scotland and Nigeria.
By Thursday, prices had slipped to $111 after a strike ended in key crude producer Nigeria and as the US currency continued to strengthen.
The dollar fell to a record low of 1.6019 to the euro on April 22 but has since recovered. The euro changed hands at about $1.54 on Friday.
Oil prices began falling sharply on Tuesday as a strike ended at the Grangemouth refinery in Scotland. The stoppage had closed a pipeline that supplies 40 per cent of Britain’s oil and gas.
Prices continued to weaken on Wednesday after the US Department of Energy said that US crude reserves had risen sharply last week.
They recovered towards the end of the week in reaction to news officially announced Friday that Turkish planes bombed Kurdish rebel hideouts in oil-rich Iraq late on Thursday.
The recent record run in oil prices has sparked widespread international concern among consumer nations.
Kuwaiti Oil Minister Mohammad al-Olaim said Wednesday that Opec may hold an extraordinary meeting on oil prices before a scheduled conference in September and did not appear to rule out higher production.
However, Libya’s acting oil minister Chukri Ghanem indicated that the Organization of Petroleum Exporting Countries cannot pump more crude oil.
By Friday, New York’s main oil futures contract, light sweet crude for delivery in June, plunged to $113.82 per barrel from $117.74 a week earlier.
Brent North Sea crude for June dived to $112.11 per barrel from $115.91.
BASE METALS: The base metals complex fell sharply as traders took their lead from the rebounding dollar.
Going forward it does look as though the course of the dollar is going to be all important for most of the metals, said BaseMetals.com analyst William Adams.
However, if the dollar does start to correct to the upside then the main losers in the short term may be those metals that are not facing supply constraints and that have high stock levels.
This includes aluminium, nickel and to a lesser extent lead and zinc. By Friday, copper for delivery in three months dived to $8,200 per ton on the LME from $8,520 a week earlier.
Three-month aluminium slid to $2,870 per ton from $2,959.
Three-month nickel fell to $27,700 per ton from $28,901.
Three-month lead dropped to $2,535 per ton from $2,735.
Three-month zinc was down to$ 2,180 per ton from $2,235.
Three-month tin tumbled to $22,802 per ton from $24,745.
GOLD AND SILVER: Prices of gold and silver also slid on the weak greenback.
Continued dollar strength put the precious complex on the defensive Thursday with gold dipping briefly below the 850-dollar mark to its lowest since the start of the year, said James Moore at TheBullionDesk.com.
On the London Bullion Market, gold dropped to $853.50 per ounce at Friday’s late fixing from $891.50 a week earlier.
Silver sank to $16.19 per ounce from $16.68.
PLATINUM AND PALLADIUM: Platinum and palladium shed about five per cent in value, but losses were capped by tight supplies in key producer South Africa.
The country, which produces about 75pc of the world’s platinum, has faced dwindling output because of accidents, strikes and major power shortages.
Platinum, used in the production of expensive jewellery and catalytic converters in vehicles, had hit a record $2,301.50 on March 7.
On the London Platinum and Palladium Market, platinum fell to $1,855 per ounce at the late fixing on Friday from $1,951 a week earlier.
Palladium was down to $412 per ounce from $434.
COFFEE: Coffee prices slid in line with most commodities.
The commodity complex was slammed as losses were seen across coffee, cocoa and sugar as well as other markets, said Sucden analyst Ryan Bennett.
By Friday on LIFFE, Robusta for July delivery sank to $2,130 per ton from $2,229 the previous week.
On the NYBOT, Arabica for July delivery fell to 129 US cents per pound from 130.25 cents.
COCOA: Cocoa prices declined.
By Friday on LIFFE, London’s futures exchange, the price of cocoa for July delivery dipped to 1,386 pounds per ton from 1,492 pounds a week earlier.
On the New York Board of Trade (NYBOT), the July cocoa contract fell to $2,130 per ton from $2,773.
SUGAR: Sugar prices fell on profit-taking.
By Friday on LIFFE, the price per ton of white sugar for August delivery fell to 327 pounds from 346 pounds the previous week.
On NYBOT, the price of unrefined sugar for July delivery slipped to 11.37 US cents per pound from 12.29 cents.
GRAINS AND SOYA: Prices sank, with the exception of maize, which scored a historic peak because of poor weather in key producer the United States.
Maize, or corn, hit an all-time pinnacle of $6.205 a bushel on Tuesday.
Corn is higher because we continue to have wet weather and it’s slowing planting progress, Allendale analyst Joe Victor.
At this point of time, the main focus is to try to get the corn crop planted and we have significant delays that are occurring and that is supportive to the corn market. By Friday on the Chicago Board of Trade, maize for July delivery rallied to $6.13 per bushel from $5.77 a week earlier.
July-dated soyabean meal — used in animal feed — fell to $12.72 from $13.37.
Wheat for July delivery dropped to $8.01 per bushel from $8.15.
On LIFFE, London’s futures exchange, the price per ton of wheat for November delivery was unchanged at 140 pounds.
—AFP