Commodity prices mainly rise amid mixed economic outlook

10th September 2010, Comments 0 comments

World commodity prices mostly rose this week as markets digested a mixed outlook for the global economy.

World economic recovery is slowing faster than expected and extra stimulus from governments may be needed, although another recession remains "unlikely," the OECD said on Thursday.

Growth in the Group of Seven leading industrialised economies could slow to an annual rate of 1.5 percent in the second half of the year, the Organisation for Economic Cooperation and Development said in an interim assessment, lowering a projection in May of 1.75 percent.

OIL: World oil prices rose slightly thanks to supportive data and a pipeline closure late in the week.

The International Energy Agency on Friday raised its overall forecast for 2010 by 50,000 barrels a day -- reflecting mainly higher-than-expected demand in North America and advanced countries in Asia.

Those increases more than offset a lowering of forecast overall demand from non-OECD countries and notably the Middle East and Asia, by 30,000 barrels a day. Demand in China will continue to grow strongly, but at a sharply slower pace, the IEA said.

Prices also rose after "the closure of a major pipeline taking Canadian crude into the US Mid-West" following a reported leak, said David Hufton, an analyst at PVM Oil Associates.

The US Department of Energy meanwhile reported on Thursday that crude inventories had dropped by a modest 1.9 million barrels the previous week.

The US economy is the world's biggest energy consumer and its economic data is widely followed to gauge American consumer spending including on energy.

On the US economic front, data out on Thursday showed new claims for jobless benefits for the week to September 4 fell to 451,000, down 27,000 from the previous week's revised figure.

The latest figure was better than most economists' expectations of 470,000 new claims, sparking optimism that recent negative trends were just a blip on the road to recovery.

By late Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in October rose to 77.63 dollars from 77.24 dollars a week earlier.

On the New York Mercantile Exchange, Texas light sweet crude for October jumped to 75.86 dollars a barrel compared with 75.07 dollars.

PRECIOUS METALS: Gold again got close to its record high and silver hit the highest level for more than two years before falling on profit-taking.

"The yellow metal is still well supported as global risk sentiment remains far from rosy and economic uncertainty continues to grip the investor community," said VTB Capital analyst Andrey Kryuchenkov.

The precious metal had forged a record 1,265.30 dollars an ounce on June 21, propelled partly by concerns over the poor economic climate.

This week, silver hit 20.15 dollars an ounce -- the highest point since March 2008.

Also this week, the International Monetary Fund said it was selling gold worth around 403 million dollars to Bangladesh.

The Washington-based institution has been selling gold as it seeks to bolster its finances amid the global economic crisis.

IMF members agreed in 2008 that the fund could sell an eighth of its gold assets in order to diversify its financial model so that it no longer relies on lending. The fund is one of the world's largest holders of the precious metal.

By late Friday on the London Bullion Market, gold rose to 1,246.50 dollars an ounce from 1,240.50 dollars a week earlier.

Silver rallied to 19.90 dollars an ounce from 19.66 dollars.

On the London Platinum and Palladium Market, platinum dropped to 1,545 dollars an ounce from 1,553 dollars.

Palladium fell to 518 dollars an ounce from 524 dollars.

BASE METALS: Base or industrial metals traded mixed.

"The market remains concerned about the overall big picture outlook and in turn that seems likely to keep downward pressure on metals," said analyst William Adams.

By late Friday on the London Metal Exchange, copper for delivery in three months fell to 7,555 dollars a tonne from 7,697 dollars.

Three-month aluminium dropped to 2,105 dollars a tonne from 2,161 dollars.

Three-month lead rose to 2,201 dollars a tonne from 2,178 dollars.

Three-month tin jumped to 21,700 dollars a tonne from 21,325 dollars from a week earlier.

Three-month zinc dipped to 2,153 dollars a tonne from 2,161 dollars.

Three-month nickel increased to 22,750 dollars a tonne from 21,700 dollars.

GRAINS AND SOYA: Maize prices hit the highest levels for nearly two years on robust demand and smaller than expected US output.

Prices hit 4.795 dollars a bushel on Friday in Chicago -- the highest level since October 2008.

Elsewhere, Russian President Dmitry Medvedev said Russia's ban on grain exports would be lifted once it had worked out how much it has harvested, in an apparent contradiction of Prime Minister Vladimir Putin.

Putin said last week Russia would not lift a ban on grain exports before next year's harvest, extending the major world producer's embargo until at least mid-2011.

On August 6, wheat had soared to 8.68 dollars a bushel (about 25 kilogrammes) -- the highest level for two years -- as Putin banned his country's grain exports over a record drought.

By Friday on the Chicago Board of Trade, wheat for delivery in December fell to 7.28 dollars a bushel from 7.41 dollars the previous week.

Maize for December gained to 4.74 dollars a bushel from 4.64 dollars.

November-dated soyabean meal -- used in animal feed -- edged up to 10.36 dollars a bushel from 10.35 dollars.

COFFEE: Coffee futures struck new 13-year pinnacles in New York.

Prices hit 198.65 US cents a pound in New York -- the highest level since 1997.

By Friday on the New York Board of Trade (NYBOT), Arabica for delivery in December rose to 192.60 US cents a pound from 185.65 cents the previous week.

On LIFFE -- London's futures exchange -- Robusta for November fell to 1,588 dollars a tonne from 1,630 dollars.

COCOA: Cocoa prices touched fresh one-year lows on concerns over the harvest from leading producer Ivory Coast.

Prices hit 1,846 pounds a tonne in London and 2,615 dollars a tonne in New York -- the lowest points since September and July 2009 respectively.

By Friday On NYBOT, cocoa for delivery in December fell to 2,641 dollars a tonne from 2,748 dollars a week earlier.

On LIFFE, cocoa for December dropped to 1,853 pounds a tonne from 1,953 pounds.

SUGAR: Sugar futures struck fresh six-month highs owing to tight supplies.

Prices hit 633.10 pounds a tonne in London and 23.15 US cents a pound in New York -- the highest points since March.

By Friday on NYBOT, the price of unrefined sugar for delivery in October increased to 22.96 US cents a pound from 20.85 cents a week earlier.

On LIFFE, the price of a tonne of white sugar for October jumped to 631.10 pounds from 590.70 pounds.


© 2010 AFP

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