Commodities suffer dramatic plunge on global demand fears
Most commodities slumped this week, as traders fretted over downbeat economic data and fears of weak energy demand in the United States and elsewhere, analysts said.
"Commodities in general suffered a significant setback... as concerns over economic growth in the United States again weighed on prices," said analyst David Hart at Westhouse Securities.
However, those losses were capped somewhat by Friday's upbeat non-farm payrolls data in the United States, which is a key consumer of most raw materials.
Meanwhile this week, the star commodities performer was gold, which briefly soared to another record peak, aided by demand for the safe-haven metal.
Trading was shortened because of Britain's traditional May Day bank holiday on Monday.
OIL: World oil prices slumped, with sentiment hit by weak US economic data, a stronger dollar and concerns over dampening energy demand.
"Poor economic data out of the US and rising interest rate policies in China and India have prompted fears of growth slowdowns across the global economy, and therefore drops in demand, sending oil lower," added CMC Markets analyst Michael Hewson.
On Friday, Brent North Sea crude slumped by more than five dollars to $105.15 a barrel -- reaching the lowest level since February 21. New York crude hit a similar low at $94.63.
Oil had already plunged on Thursday, with New York crude diving at its fastest pace for two years in the wake of disappointing US jobs data and the stronger dollar.
It lost more than eight percent in value as it dropped below $100 a barrel for the first time since March 16.
Crude futures have also fallen heavily in response to downbeat Chinese economic data, and fears over the eurozone debt crisis after the bailout of debt-wracked Portugal.
"The disappointing US employment figures (on Thursday) provided the trigger for further weakness in oil market that prompted investors to this heavy sell-off across oil and base metals prices," added Sucden analyst Myrto Sokou.
Many commodities also fell as the euro tumbled against the dollar after the European Central Bank cast doubt on a eurozone interest rate rise any time soon.
A buoyant dollar tends to make dollar-priced commodities more expensive for buyers using weaker currencies. In turn, that tends to dampen demand and eventually pull prices lower.
Prices staged a modest bounceback on Friday in the wake of the upbeat payrolls numbers.
The US private sector forged ahead in creating jobs in April, a sign the recovery is gaining traction despite a rise in the unemployment rate to 9.0 percent, official data showed.
Businesses added a solid 268,000 jobs in April. Overall the economy created a net 244,000 nonfarm jobs last month, far more than the 185,000 expected, with the biggest growth in the service sector.
By late Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in June had tumbled to $112.85 a barrel from $125.35 on Thursday of the previous week.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for June plunged to $100.75 a barrel from $112.64 the previous Thursday.
PRECIOUS METALS: Gold enjoyed another historic peak at $1,577.57 per ounce, but precious metals ended with the week with sharp losses, particularly for silver which shed 30 percent in value on mounting economic concerns.
"Commodity prices have plummeted over recent days with broad-based price weakness," said Barclays Capital analyst Sudakshina Unnikrishnan.
"A spate of selling provoked by concerns on the health of the macro-economy, choppy external markets and a stronger dollar have all contributed to risk reduction and a sell-off across commodity markets.
"The price decline in silver has been especially marked," added Unnikrishnan.
By late Friday on the London Bullion Market, gold sank to $1,486.50 an ounce from $1,535.50 the previous Thursday.
Silver slumped to $34.20 an ounce from $48.70.
On the London Platinum and Palladium Market, platinum decreased to $1,789 an ounce from $1,835.
Palladium slid to $721 an ounce from $777.
BASE METALS: Industrial metals slid sharply as traders questioned whether high price levels were justified, and stubborn worries about the outlook for Chinese demand.
"There was ample justification for a pullback in many of the metals, since some in the group were clearly overbought amid questionable fundamentals (of supply and demand), with copper, aluminium and tin coming to mind," said MF Global analyst Edward Meir.
"Moreover, much of the 'play' in metals is a bet on China, but with the government there tightening the screws in order to get control of inflation, there are legitimate concerns as to whether the authorities will press too hard."
By late Friday on the London Metal Exchange (LME), copper for delivery in three months dived to $8,763.25 a tonne from $9,384 on Thursday of the previous week.
Three-month aluminium slid to $2,612 a tonne from $2,770.
Three-month lead dropped to $2,287 a tonne from $2,493.
Three-month tin retreated to $29,300 a tonne from $32,150.
Three-month zinc slipped to $2,140 a tonne from $2,238.
Three-month nickel declined to $24,405 a tonne from $26,613.
COCOA: Prices fell after rebounding sharply the previous week, with all eyes on the latest developments in key producer Ivory Coast.
Investigators grilled fallen leader Laurent Gbagbo for the first time on Friday about post-election violence which engulfed Ivory Coast, as his lawyers were turned back at the airport.
Alassane Ouattara, Gbagbo's opponent in November's disputed election, is determined that his rival will face justice over the wave of violence which ripped through the west African nation, leaving around 3,000 people dead.
By Friday on LIFFE, London's futures exchange, cocoa for delivery in July fell to £1,863 a tonne from £1,961 on Thursday of the previous week.
In New York on the NYBOT-ICE, cocoa for July slid to $3,024 a tonne from $3,277.
COFFEE: Prices hit new 34-year highs for the third week in a row on concerns over stretched global supplies, hitting 308.90 cents a pound in New York.
By Friday on NYBOT-ICE, Arabica for July sank to 291.30 US cents a pound from 301.95 cents on Thursday of the previous week.
On LIFFE, Robusta for delivery in July stood at $2,576 a tonne compared with $2,560.
SUGAR: The market fell as traders responded to plentiful supplies.
By Friday on NYBOT-ICE, the price of unrefined sugar for delivery in July slid to 20.95 US cents a pound from 22.26 cents on Thursday of the previous week.
On LIFFE, the price of a tonne of white sugar for August dropped to £580.40 from £610.60.
RUBBER: Malaysian rubber prices fell further as production increased, while sentiment was cautious about a slower global economic recovery -- especially in Asian powerhouse China.
The Malaysian Rubber Board's benchmark SMR20 fell to 439.95 US cents per kilo from 464.75 cents last week.
© 2011 AFP