Commodity prices extend slump

26th November 2011, Comments 0 comments

Commodity prices fell further this week on a mix of fresh eurozone tensions, a stronger dollar and weak data out of China and the United States, traders said.

OIL: Oil prices retreated after winning support early in the week from tensions linked to major crude exporter Iran.

The euro dropped to a seven-week low against the dollar on Friday, hitting demand for oil as a stronger US currency makes dollar-denominated crude more expensive for buyers using other, weaker currencies.

Stock markets also fell as investor confidence evaporated over a solution to the eurozone debt crisis, dealers said.

The euro plunged to $1.3212, its lowest point since the start of October as Thursday's meeting between France, Germany and Italy -- the eurozone's three biggest economies -- highlighted their differences on finding a solution to the region's debt problems.

Germany and France promised to reform EU governing treaties on Thursday but Chancellor Angela Merkel stood by her refusal to back eurobonds or widen the European Central Bank's role.

After the crisis talks, French President Nicolas Sarkozy, Merkel and Italy's new Prime Minister Mario Monti said they would move to reform EU governing treaties but said they all agreed there would be no wider ECB role.

Oil prices fell for most of the week as traders also worried about slumping manufacturing activity in top global energy consumer China.

China's manufacturing activity fell to its lowest level in 32 months in November, according to data this week from banking giant HSBC, renewing concerns that the Asian powerhouse is losing steam amid global economic woes.

The market has also been dented by weak economic growth data in the United States -- the world's biggest consumer of crude oil.

The US Commerce Department on Tuesday sharply lowered its third quarter growth estimate for the world's biggest economy to 2.0 percent from the 2.5 percent first stated.

Oil prices had risen at the start of the week on worries that the market could tighten after several Western countries imposed economic sanctions on crude producer Iran over its nuclear programme.

By late Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in January tumbled to $106.11 a barrel from $109.04 a week earlier.

On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for January stood at $96.06 a barrel compared with $98.84 for the December contract.

PRECIOUS METALS: Gold prices dropped for a second week running.

"Gold has suffered at the expense of the resurgent US dollar, slipping back towards some key support levels near to the $1,650 level, but it still remains well supported," said Michael Hewson, an analyst at traders CMC Markets.

By late Friday on the London Bullion Market, gold fell to $1,688.50 an ounce from $1,719 the previous week.

Silver dropped to $31.24 an ounce from $32.25.

On the London Platinum and Palladium Market, platinum slid to $1,529 an ounce from $1,594.

Palladium slipped to $572 an ounce from $608.

BASE METALS: Industrial metals prices fell across the board, with aluminium hitting a 14-month low point.

"Industrial metals have been under significant pressure over the past week as fears of contagion from the eurozone debt crisis have escalated," said Deutsche Bank analyst Xiao Fu.

"While Chinese copper imports remained strong in October, imports for other industrial metals slowed. This coincides with a sub-50 reading of HSBC manufacturing PMI in November, the lowest reading in over two years."

By late Friday on the London Metal Exchange, copper for delivery in three months dropped to $7,276 a tonne from $7,525 the previous week.

Three-month aluminium slid to $2,004 a tonne from $2,105.

Three-month lead decreased to $1,994 a tonne from $2,060.

Three-month tin slipped to $20,600 a tonne from $21,300.

Three-month zinc retreated to $1,901 a tonne from $1,963.

Three-month nickel declined to $17,035 a tonne from $17,850.

COCOA: Cocoa prices slumped to near three-year lows.

"Markets have been tumbling not just on macro uncertainty or the stronger US dollar, but also on deteriorating fundamentals ... as newly-harvested supply growth weighs on the market," said Macquarie bank analyst Kona Haque.

By Friday on LIFFE, London's futures exchange, cocoa for delivery in March slid to £1,532 a tonne from £1,584 for the December contract a week earlier.

In New York on the NYBOT-ICE, cocoa for March retreated to $2,383 a tonne from $2,492.

COFFEE: Prices traded mixed as markets tracked changes to weather patterns.

"Concerns of possible damage to the next coffee crop in Brazil have eased somewhat thanks to the recent rainfalls," said analysts at Commerzbank.

By Friday on LIFFE, Robusta for delivery in January increased to $1,882 a tonne from $1,846 a week earlier.

On NYBOT-ICE, Arabica for March edged down to 234 US cents a pound from 236.85 cents.

SUGAR: Sugar futures tumbled further.

By Friday on NYBOT-ICE, the price of unrefined sugar for delivery in March slid to 22.86 US cents a pound from 24.23 cents a week earlier.

On LIFFE, the price of a tonne of white sugar for March declined to £600.40 from £627.40.

GRAINS AND SOYA: Maize, wheat and soya prices slumped for a third week running.

By Friday on the Chicago Board of Trade, maize for delivery in December dropped to $5.88 a bushel from $6.10 a week earlier.

Wheat for December decreased to $5.79 a bushel from $5.98.

January-dated soyabean meal -- used in animal feed -- slipped to $11.15 a bushel from $11.68.

RUBBER: Rubber prices slipped on weak demand and high rubber stocks in China, factors that offset fears of a shortage due to the rainy season in Malaysia and Thailand.

The Malaysian Rubber Board's benchmark SMR20 fell to 322.95 US cents a kilo from 335.45 cents the previous week.


© 2011 AFP

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