Commodity prices rebound, cocoa hits 32-year high

28th May 2010, Comments 0 comments

Commodity prices mostly recovered this week on easing worries about the eurozone debt crisis, with cocoa striking a 32-year high level.

"Commodity prices have picked up in recent days in the wake of the rather indiscriminate selling that dragged prices lower in recent weeks," said Barclays Capital analyst Sudakshina Unnikrishnan.

"Macro-economic related fears remain but after causing the steep decline in prices, are now taking a bit of a backseat as commodity (supply and demand) fundamentals reaffirm themselves.

"Crude oil prices have gained with the continuation of supportive US oil demand data; base metals remain more mixed; precious metals have been supported by further safe haven buying and investor interest while agricultural markets, which didn't suffer as badly as the rest of the complex, are modestly firmer."

Many commodities had plunged the previous week as traders worried about the eurozone debt crisis, a strong dollar, the strength of Chinese demand and falling global share prices.

OIL: Oil prices rallied back above 75 dollars this week, boosted by signs of higher demand for energy, traders said, and after dropping close to 10-month lows one week earlier.

"Oil prices continue to rise as the focus on fundamentals returns, with OECD oil demand and in particular US oil demand improving markedly," said Barclays Capital analyst Amrita Sen.

Oil prices began spiking on Wednesday, with sentiment lifted by recovering stock markets and fresh data pointing to a sustained economic recovery in the key US energy market.

A report by the US Department of Energy showed an unexpected dip in US gasoline (petrol) supplies of 200,000 barrels. Distillate stocks, including diesel and heating oil, fell 300,000 barrels in the week ending May 21.

Andrey Kryuchenkov, a commodities analyst with Russian investment bank VTB Capital, said the market was "upbeat about healthy demand for fuel products in the US."

Oil built on Wednesday's gains by surging more than two dollars on Thursday as the euro rebounded against the dollar and global stock markets bounced higher, traders said.

A weaker US unit makes dollar-priced crude cheaper for buyers using stronger currencies, which therefore tends to stimulate oil demand and push prices higher.

Crude oil prices sunk more than one dollar on Tuesday on fears the eurozone financial crisis could turn toxic for the global economic recovery.

Fears that contagion from Greece's sovereign debt crisis could spread to other vulnerable eurozone members were heightened by the Spanish government's bailout of a regional savings bank, Cajasur, over the weekend.

By late Friday on the New York Mercantile Exchange, Texas light sweet crude for delivery in July surged to 74.58 dollars a barrel from 70.02 a week earlier.

On London's Intercontinental Exchange, Brent North Sea crude for July delivery soared to 74.63 dollars compared with 71.72 dollars.

PRECIOUS METALS: Prices recovered after sharp losses a week earlier.

"The precious complex gained ground alongside rallying equities with improving risk sentiment across the board," said VTB Capital analyst Andrey Kryuchenkov.

The glamorous metal had hit an all-time pinnacle of 1,249.40 dollars an ounce in early May, dragging sister metal silver to a two-year peak.

In recent weeks, heightened concerns about the risk of contagion from Greece's debt woes has attracted fresh inflows of cash into gold, which is widely regarded as a safe bet in times of economic uncertainty.

By late Friday on the London Bullion Market, gold prices rallied to 1,218.47 dollars an ounce from 1,179.75 dollars the previous week.

Silver rose to 18.53 dollars an ounce from 17.72 dollars.

On the London Platinum and Palladium Market, platinum climbed to 1,555 dollars an ounce from 1,492 dollars.

Palladium increased to 471 dollars an ounce from 419 dollars.

BASE METALS: Base metals prices rose across the board.

"We have seen how fickle sentiment has been over the last few weeks, and so we would rather watch the action from the sidelines for at least another few days to see whether the current bounce is indeed being led by a change of perceptions, or is merely another ill-fated short-covering rally," said MF Global analyst Ed Meir.

By Friday on the London Metal Exchange, copper prices for delivery in three months rose to 6,991 dollars a tonne from 6,731 dollars a week earlier.

Three-month aluminium climbed to 2,075 dollars a tonne from 2,036 dollars.

Three-month lead gained to 1,868 dollars a tonne from 1,766 dollars.

Three-month tin grew to 18,200 dollars a tonne from 17,400 dollars.

Three-month zinc advanced to 1,942 dollars a tonne from 1,878 dollars.

Three-month nickel increased to 21,630 dollars a tonne from 21,255 dollars.

COCOA: Cocoa futures struck the highest level for 32 years in London, at 2,451 pounds a tonne.

"Ghana's poor harvest... adjoins the weak performance in the Ivory Coast, where we have seen port arrivals down 3.7 percent year-on-year up to mid-May," said Barclays Capital analysts in a research note.

By Friday on LIFFE -- London's futures exchange -- the price of cocoa for delivery in July jumped to 2,437 pounds a tonne from 2,317 pounds the previous week.

On the NYBOT, the July cocoa contract grew to 2,985 dollars a tonne from 2,896 dollars.

GRAINS AND SOYA: Maize and soyabean prices edged ahead, while wheat fell.

By Friday on the Chicago Board of Trade, maize for delivery in July firmed to 3.695 dollars a bushel from 3.69 dollars the previous week.

July-dated soyabean meal -- used in animal feed -- climbed to 9.50 dollars from 9.41 dollars.

Wheat for July dropped to 4.6 dollars a bushel from 4.72 dollars.

COFFEE: Coffee prices steadied.

By Friday on LIFFE, Robusta for delivery in July eased to 1,333 dollars a tonne from 1,334 dollars the previous week.

On the NYBOT, Arabica for July gained to 135 US cents a pound from 132 cents.

SUGAR: Sugar prices retreated.

By Friday on the New York Board of Trade (NYBOT), the price of unrefined sugar for delivery in July dropped to 14.83 US cents a pound from 15.45 cents the previous week.

On LIFFE, the price of a tonne of white sugar for August slid to 475.80 pounds from 497.60 pounds.

RUBBER: Malaysian rubber prices gained in thin trade.

The Malaysian Rubber Board's benchmark SMR20 rose to 287.80 US cents a kilo on Thursday from 270.30 cents the previous Friday.


© 2010 AFP

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