Commodities suffer choppy week amid US economic gloom
Commodity prices faced choppy trade this week, hit by spreading concern that the United States economy has run into serious trouble after publication of a dismal payrolls report.
"It has been a very volatile week with choppy trading conditions across the markets," said Sucden commodities analyst Myrto Sokou.
"Fairly disappointing figures from the US regarding poor manufacturing, construction and employment data weighed heavily on the market sentiment and confirmed a slowdown in the economy.
"However, on the other hand, the weak US dollar provides strong support to oil and base metals prices, holding prices at fairly high levels."
Continued Middle East unrest, with an upsurge of violence in Yemen, highlighted the political risk posed by popular unrest across the region.
Dealers said news late Friday that the European Union, the International Monetary Fund and the European Central Bank were ready to offer indebted Greece fresh aid and had cleared the next loan tranche under its 2010 debt bailout should ease some concerns in the markets over the eurozone outlook.
OIL: Oil prices fell on Friday as traders absorbed a much weaker-than-expected non-farm payrolls report in top crude consumer the United States.
The US economy created just 54,000 net new jobs in May, only one-quarter of the February-April pace and well short of forecasts for 169,000, while the unemployment rate edged up to 9.1 percent, the Labor Department said.
The private sector, expected to drive the economy as governments slash spending, added only 83,000 positions, one-third the rate of the previous three months.
Friday's report confirmed the sharp slowdown in economic growth since the beginning of 2011.
"The data ... strongly suggested that the recovery has hit its second 'soft patch' which, for an expansion that is less than two years old, is troubling to say the least," said Capital Economics analyst Paul Ashworth.
Markets have been battered by a series of grim US indicators on jobs and manufacturing.
Adding to the mix, Moody's warned Thursday that United States faces a credit review and potentially crippling downgrade if the national debt limit, currently at $14.29 trillion, is not raised within weeks.
Prices took a hit after Wednesday's news that US crude reserves jumped 2.9 million barrels in the week ending May 27, confounding market expectations of a drop.
Worsening violence in Yemen, near to key oil routes, stoked fears of spreading unrest across the crude-rich Middle East and North Africa region.
Traders are looking ahead to a meeting of the Organisation of Petroleum Exporting Countries (OPEC) in Vienna on June 8 when the 12-nation cartel is forecast to hold crude production levels unchanged as it balances the possibility of a weak global economy and unrest in the Middle East.
Libyan Oil Minister Shukri Ghanem has meanwhile resigned and left Libya to join the uprising against Moamer Kadhafi's regime. Ghanem, head of the state-run National Oil Corporation, had been Libya's OPEC representative for years.
Libya was producing 1.69 million barrels a day before the unrest but this has long since almost ground to a halt.
By late Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in July rose to $115.12 a barrel from $114.67 the previous week.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for July eased to $99.75 a barrel from $100.35.
PRECIOUS METALS: Gold enjoyed solid gains, garnering support from its status as a safe haven in uncertain economic times.
"Amid these tentative economic conditions, gold continues to remain the highlight of the week, posting fresh gains, as uncertain economic conditions in the eurozone, Yemen and the United States prompt investors to more safe choices," said Sokou at the Sucden brokerage.
By late Friday on the London Bullion Market, gold rose to $1,540 an ounce from $1,533 the previous week.
Silver sank to $35.19 an ounce from $37.69.
On the London Platinum and Palladium Market, platinum climbed to $1,807 an ounce from $1,779.
Palladium gained to $770 an ounce from $757.
BASE METALS: Industrial metals prices mostly fell against a backdrop of downbeat global economic data.
By late Friday on the London Metal Exchange (LME), copper for delivery in three months fell to $9,006.25 tonne from $9,184 the previous week.
Three-month aluminium rose to $2,627.50 a tonne from $2,601.
Three-month lead dipped to $2,407 a tonne from $2,514.
Three-month tin sank to $25,810 a tonne from $27,300.
Three-month zinc eased to $2,239.50 a tonne from $2,279.
Three-month nickel dropped to $22,605 a tonne from $23,025.
COCOA: Prices fell after the International Cocoa Organization revised upwards its forecast for production in 2010-11.
"The background to this change in forecast is the better-than-expected harvest in Ghana, the world's second largest producer," noted Commerzbank analyst Carsten Fritsch.
By Friday on LIFFE, London's futures exchange, cocoa for delivery in July slid to £1,782 a tonne from £1,843 the previous week.
In New York on the NYBOT-ICE, cocoa for July fell to $2,875 a tonne from $3,020.
COFFEE: Coffee retreated in line with many raw materials.
By Friday on NYBOT-ICE, Arabica for July eased to 263.30 US cents a pound from 269.55 cents the previous week.
On LIFFE, Robusta for delivery in July sank to $2,496 a tonne from $2,603.
SUGAR: Sugar extended its upwards run.
By Friday on NYBOT-ICE, the price of unrefined sugar for delivery in July rose to 23.86 US cents a pound from 22.85 cents the previous week.
On LIFFE, the price of a tonne of white sugar for August increased to £695.70 from £656.60.
GRAINS AND SOYA: Wheat and maize prices fell while soya gained ground.
By Friday on the Chicago Board of Trade, maize for delivery in July dropped to $7.54 a bushel from $7.58 a week earlier.
July-dated soyabean meal -- used in animal feed -- rose to $14.09 a bushel from $13.79.
Wheat for July sank to $7.72 from $8.19.
RUBBER: Prices flattened as tight supplies and keen buying interest were offset by the strengthening of the Malaysian ringgit, weak US economic data and low Chinese demand.
The Malaysian Rubber Board's benchmark SMR20 rose slightly to 466.90 US cents per kilo from 465.20 US cents last week.
© 2011 AFP