China rate hikes ruffle commodities
Commodity prices diverged this week as traders took their cue from interest hikes in China, one of the world's biggest consumers of raw materials.
Traders also reacted to a strengthening dollar, which makes commodities more expensive for holders of weaker currencies, weighing on demand.
The dollar rose against the euro on Friday as leading finance ministers met amid talk of a global currency war between countries looking to currency weakness to boost exports.
The United States urged G20 powers to reform their currency regimes to shore up the fragile world economy after a devastating crisis, but faced resistance to its ideas on Friday.
G20 finance ministers and central bankers opened a two-day meeting in South Korea, stalked by warnings of an all-out currency war between debtor nations such as the United States and export powerhouses such as China.
Ministers from the G7 grouping of North America, Western Europe and Japan met for an hour ahead of the G20 talks, facing warnings that failure to rectify skewed economic growth could ignite 1930s-style trade protectionism.
OIL: Oil prices fell after China, the world's biggest energy consuming nation moved to raise interest rates to contain inflation and soaring property prices.
"The correction in oil on Tuesday was the result of the surprise move by China to raise interest rates," said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.
"The fear is that China will slow down in its economic growth and will reduce the buying of commodities and everything else."
By late Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in December dropped to 82.10 dollars a barrel from 83.60 dollars a week earlier.
On the New York Mercantile Exchange, Texas light sweet crude for December slid to 80.61 dollars a barrel from 82.41 dollars.
PRECIOUS METALS: Gold prices dropped after striking a record-high a week earlier.
"We maintain a positive view on gold, but would not rule out temporary price corrections as profit-taking emerges should the dollar strengthen further," said Barclays Capital analyst Suki Cooper.
Gold had struck an all-time peak of 1,387.35 dollars an ounce the previous week as the dollar tumbled and on strengthening hopes of new monetary easing measures from the US Federal Reserve, according to traders.
By late Friday on the London Bullion Market, gold fell to 1,322.50 dollars an ounce from 1,367.50 dollars a week earlier.
Silver slipped to 23.05 dollars an ounce from 24.42 dollars.
On the London Platinum and Palladium Market, platinum slid to 1,673 dollars an ounce from 1,691 dollars.
Palladium eased to 586 dollars an ounce from 591 dollars.
BASE METALS: Base metals prices were mixed "in what has been an extremely choppy week," noted MF Global analyst Ed Meir.
Prices slumped on Tuesday following rate hikes in China -- "by far the largest consumer of base metals," according to Commerzbank analysts.
They recovered on Wednesday as attractive price levels enticed dealers to the market.
By late Friday on the London Metal Exchange, copper for delivery in three months fell to 8,330 dollars a tonne from 8,392 dollars a week earlier.
Three-month aluminium dipped to 2,382 dollars a tonne from 2,390 dollars.
Three-month lead jumped to 2,534 dollars a tonne from 2,387 dollars.
Three-month tin dropped to 26,300 dollars a tonne from 26,874 dollars from a week earlier.
Three-month zinc gained to 2,527 dollars a tonne from 2,408 dollars.
Three-month nickel slipped to 23,400 dollars a tonne from 23,900 dollars.
COFFEE: Coffee prices hit 13-year highs of 203.5 cents in New York on supply concerns.
"Arabica has thus surged in price by 50 percent within the past four months," noted analysts at Commerzbank.
"The reason here is concerns about supply bottlenecks. (...) The Colombian government felt compelled this month to reduce its crop forecast for 2010 by 5 percent."
They added that the coffee crop in major producer Brazil could be lower than expected next year.
By Friday on the New York Board of Trade (NYBOT), Arabica for delivery in December rallied to 199.25 cents a pound from 185.85 cents the previous week.
On LIFFE -- London's futures exchange -- Robusta for January jumped to 1,883 dollars a tonne from 1,685 dollars.
COCOA: Cocoa futures advanced.
"The advancing West African harvest weighed on values and kept prices within a tight range, as traders are generally anticipating large crops," said commodities publication, The Public Ledger.
By Friday On NYBOT, cocoa for delivery in December grew to 2,845 dollars a tonne from 2,814 dollars a week earlier.
On LIFFE, cocoa for December rose to 1,908 pounds a tonne from 1,865 pounds.
SUGAR: Sugar futures hit eight-month highs.
"Ongoing concerns about the potential for tight global sugar supplies added to the firmer tone," said The Public Ledger.
By Friday on NYBOT, the price of unrefined sugar for delivery in March climbed to 28.26 US cents a pound from 27.45 cents a week earlier.
On LIFFE, the price of a tonne of white sugar for December jumped to 708.10 pounds from 697.10 pounds.
GRAINS AND SOYA: Soya prices hit 19-month highs as dry weather in Brazil ignited worries about supplies.
Soya hit 12.35 dollars a bushel -- the highest point since June 2009.
"Soybeans sales have remained very strong," said Bill Nelson, an analyst at consultancy group Doane Advisory Services.
"There are worries about areas of dry weather in Brazil."
By Friday on the Chicago Board of Trade, January-dated soyabean meal -- used in animal feed -- rose to 12.17 dollars a bushel from 11.95 dollars.
Maize for delivery in December climbed to 5.64 dollars a bushel from 5.63 dollars the previous week.
Wheat for December fell to 6.67 dollars a bushel from 7.04 dollars.
RUBBER: Malaysian rubber prices rose on tight supplies.
The Malaysian Rubber Board's benchmark SMR20 increased to 392.70 US cents per kilo, from 359.95 cents a week earlier.
© 2010 AFP