Commodities mostly fall in volatile trade amid EU summit

9th December 2011, Comments 0 comments

Commodity prices mostly fell this week in volatile deals as traders digested an EU summit that had been aimed at resolving the eurozone sovereign debt crisis once and for all.

European Union leaders banded together at a Brussels summit on Friday to back tighter budget policing in a desperate bid to save the eurozone, with Britain left isolated after it vetoed a new EU treaty.

"As the week winds down, hopes are higher, wisely or not, that the EU is groping its way towards some sort of fiscal union agreement," said IG Markets analyst Chris Beauchamp.

After years of foot-dragging on deepening integration, 26 of the 27 EU states signalled their willingness to join a "new fiscal compact" to resolve the crisis threatening to crack apart the monetary union.

However, non-euro Britain vetoed a Franco-German drive to enshrine new budget rules in a modified EU treaty.

"One cannot help sense that -- despite EU leaders calling the summit as the final chance to save the eurozone -- the can has simply been kicked further down the road," noted City Index analyst Joshua Raymond.

OIL: World oil prices sank this week on the back of lingering eurozone worries and global economic doubts.

"Attitudes to risk and views on the global economy are likely to remain the main drivers of commodity markets in the short term," said Barclays Capital analyst Sudakshina Unnikrishnan.

And she warned: "There are still potential setbacks for commodities if the European debt situation deteriorates further."

Investor sentiment was also dampened by remarks from European Central Bank (ECB) president Mario Draghi, who dashed hopes that the bank would intervene to prop up eurozone sovereign bonds.

"Markets were disappointed that Draghi maintained a hardline stance against expanding its balance sheet be it via direct intervention in the bond markets or other indirect means or partial measures," Singapore's DBS bank said.

Draghi said Thursday that hoped-for ECB action to buy up the sovereign bonds of debt-wracked countries was "limited" and "temporary".

His comments were a blow to crude markets which had rallied after the ECB lowered its main interest rate by a quarter percentage point to 1.00 percent to spur economic activity.

Traders also eyed next week's output meeting of the Organization of Petroleum Exporting Countries (OPEC), the cartel which pumps about one third of the world's oil.

By late Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in January fell to $107.89 a barrel from $108.92 a week earlier.

On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for January slid to $98.38 a barrel from $100.26.

PRECIOUS METALS: Most precious metals slid, in line with many other commodities.

By late Friday on the London Bullion Market, gold slipped to $1,709 an ounce from $1,747 the previous week.

Silver dropped to $32.00 an ounce from $33.15.

On the London Platinum and Palladium Market, platinum slid to $1,496 an ounce from $1,559.

Palladium firmed to $670 an ounce from $653.

BASE METALS: Base or industrial metals mainly fell in value.

"A weakening outlook for Europe and concerns about whether China will continue to engineer a soft landing continue to constrain market sentiment," said Barclays Capital analyst Gayle Berry.

"The markets are certainly discounting a weak growth outlook for European, and there are already indications of this feeding into a contraction in regional demand for the majority of complex, although some metals have proved resilient so far."

By late Friday on the London Metal Exchange, copper for delivery in three months sank to $7,750 a tonne from $7,883 the previous week.

Three-month aluminium slid to $2,080 a tonne from $2,145.

Three-month lead decreased to $2,105 a tonne from $2,120.

Three-month tin rose to $20,100 a tonne from $19,800.

Three-month zinc retreated to $1,992 a tonne from $2,044.

Three-month nickel dipped to $18,500 a tonne from $17,000.

COCOA: Cocoa prices fell further on the back of plentiful supplies in leading producer Ivory Coast.

By Friday on LIFFE, London's futures exchange, cocoa for delivery in March dropped to £1,337 a tonne from £1,466 a week earlier.

In New York on the NYBOT-ICE, cocoa for March slid to $2,082 a tonne from $2,290.

COFFEE: Prices also beat a retreat.

By Friday on LIFFE, Robusta for delivery in January slipped to $1,924 a tonne from $2,032 a week earlier.

On NYBOT-ICE, Arabica for March declined to 229.75 US cents a pound from 236.75 cents.

SUGAR: Sugar futures drifted lower.

By Friday on NYBOT-ICE, the price of unrefined sugar for delivery in March eased to 23.50 US cents a pound from 23.54 cents a week earlier.

On LIFFE, the price of a tonne of white sugar for March reversed to £611 from £613.20.

GRAINS AND SOYA: Maize, wheat and soya prices also recoiled.

By Friday on the Chicago Board of Trade, maize for delivery in March rose to $5.89 a bushel from $5.95 a week earlier.

Wheat for December decreased to $5.89 a bushel from $6.25.

January-dated soyabean meal -- used in animal feed -- receded to $11.07 a bushel from $11.35.

RUBBER: Prices were lifter supply concerns in key producers Malaysia and Thailand due to the annual rainy season.

The Malaysian Rubber Board's benchmark SMR20 rose to 340.45 US cents a kilo from 333.50 cents the previous week.


© 2011 AFP

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