Commodity prices tumble on weak demand fears
Commodity prices mostly slumped this week on fears of sluggish demand for raw materials following the release of poor global economic data, analysts said.
They however won some support on Friday in the wake of better-than-expected US jobs data that followed a week of disappointing economic data out of the United States and China -- both leading consumers of commodities.
The US unemployment rate fell to 9.5 percent in June, despite the economy shedding 125,000 jobs, the Labor Department said on Friday. The unemployment rate was down from 9.7 percent in May, but jobs were lost for the first time this year.
Most analysts had expected the ranks of jobless Americans to have swollen beyond 15 million, pushing the unemployment rate from 9.7 percent to 9.8 percent.
"Macroeconomic fears continue to engulf most commodity markets," said Barclays Capital analyst Amrita Sen.
"No doubt the strength of the macroeconomic data has come off the boil a bit; however, it is important to put that slowdown into perspective," she added.
"Chinese data, not just macroeconomic, but even for oil demand, has been growing at a phenomenal pace, and in our view, at almost unsustainable growth rates.
"The slowdown then is coming from absolute levels of demand that are far higher than many were expecting even a few months ago, and thus, is more likely to put Chinese growth rates on a more tenable growth path longer term."
China said Friday that its red-hot economy had expanded by 9.1 percent in 2009, upwardly revised from an earlier figure of 8.7 percent.
But the revision comes ahead of second-quarter data due this month that is expected to show the world's second-biggest energy consumer slowed in the three months to June.
PRECIOUS METALS: The price of gold slumped after striking a record high the previous week.
"Fears the global economic recovery could falter with some economies slipping into double-dip recession triggered a rout of risk reduction," said James Moore, analyst at TheBullionDesk.com.
Gold had struck an all-time peak of 1,265.30 dollars an ounce on June 21 as the dollar weakened.
By late Friday on the London Bullion Market, gold dropped to 1,201.50 dollars an ounce from 1,254 dollars the previous week.
Silver slid to 17.98 dollars an ounce from 18.65 dollars.
On the London Platinum and Palladium Market, platinum retreated to 1,516 dollars an ounce from 1,549 dollars.
Palladium decreased to 433 dollars an ounce from 466 dollars.
OIL: Crude oil tumbled as weak data sparked serious concern about lower energy demand in a faltering global economic recovery.
Prices dived by almost three dollars on Thursday alone, hammered by a batch of downbeat economic data on the first day of the third quarter of 2010.
"The start to the new quarter saw more pain for the oil market," said VTB Capital analyst Andrey Kryuchenkov.
"Crude prices tumbled ... after even more downbeat data from the United States. The market was already under pressure in early trading on worries of slowing growth in China.
"However, exceptionally weak US June Manufacturing PMIs, rising weekly jobless claims and a sharp contraction in May pending home sales were the last straws," he added.
Separate surveys this week showed slowing growth in manufacturing activity in China during June.
The HSBC China Manufacturing PMI, or purchasing managers index, fell to 50.4 last month from 52.7 in May, the bank said.
A Chinese government agency said its PMI fell to 52.1 from 53.9 the previous month. A 50 reading is the breakeven point between growth and contraction.
The US manufacturing sector, which has been driving the almost year-old fragile economic recovery from recession, grew for the 11th straight month in June but at a slower pace than expected, an industry survey showed.
The Institute of Supply Management (ISM) said its PMI slipped to 56.2 percent from 59.7 percent in May.
Meanwhile new claims for US unemployment benefits jumped more than expected last week, official data showed Thursday on the eve of the key June jobs report.
And pending US home sales plunged 30 percent in May after the expiration of an April 30 tax-credit deadline, more than twice as much as analysts expected.
Ahead of an American public holiday on Monday, oil rose as traders digested a mixed US payrolls report.
"June's employment report supports other evidence showing that the (US) economy has lost some momentum in recent months, but it is not yet collapsing," said economist Paul Dales at consultancy Capital Economics.
By late Friday on the New York Mercantile Exchange, Texas light sweet crude for delivery in August slid to 72.98 dollars a barrel from 78.55 dollars.
On London's Intercontinental Exchange, Brent North Sea crude for August delivery tumbled to 72.38 dollars from 78.00 dollars.
BASE METALS: Base metal prices dropped this week.
"Metal prices declined broadly once again ... due to weaker economic data and sagging stock markets," Commerzbank analysts said in a research note.
By Friday on the London Metal Exchange, copper for delivery in three months fell to 6,484 dollars a tonne from 6,630 dollars a week earlier.
Three-month aluminium slid to 1,953 dollars a tonne from 1,976 dollars.
Three-month lead retreated to 1,760 dollars a tonne from 1,818 dollars.
Three-month tin slipped to 17,200 dollars a tonne from 18,025 dollars.
Three-month zinc decreased to 1,795.25 dollars a tonne from 1,839 dollars.
Three-month nickel fell to 19,099 dollars a tonne from 19,400 dollars.
COFFEE: Coffee futures steadied a week after reaching 12-year highs owing to tight supplies.
The previous week in New York, Arabica for September had jumped to 176.50 US cents a pound -- striking a level that was last seen in February 1998.
By Friday on LIFFE -- London's futures exchange -- Robusta for delivery in September rose to 1,710 dollars a tonne from 1,667 dollars the previous week.
On the New York Board of Trade (NYBOT), Arabica for September dipped to 166.30 US cents a pound from 167.30 cents.
COCOA: Cocoa prices retreated.
By Friday on LIFFE, the price of cocoa for delivery in September fell to 2,393 pounds a tonne from 2,492 pounds the previous week.
On the NYBOT, the September cocoa contract slid to 3,021 dollars a tonne from 3,119 dollars.
SUGAR: Sugar prices traded mixed.
By Friday on the NYBOT, the price of unrefined sugar for delivery in September rose to 16.33 US cents a pound from 16.25 cents the previous week.
On LIFFE, the price of a tonne of white sugar for October dropped to 482 pounds from 542.80 pounds.
GRAINS AND SOYA: Maize and wheat prices rebounded on data showing weaker-than-expected stockpiles in the United States, while soya eased.
"US corn inventories on 1 June only amounted to 4.3 billion bushels. Previous expectations were well over 6 percent higher," said analysts at Commerzbank.
"The tighter corn supply in form of reduced inventories and the prospect of a harvest that might be worse than expected caused the price for corn to soar ... This also lifted the price for wheat," they added.
By Friday on the Chicago Board of Trade, maize for delivery in December jumped to 3.82 dollars a bushel from 3.60 dollars the previous week.
November-dated soyabean meal -- used in animal feed -- dipped to 9.05 dollars from 9.12 dollars.
Wheat for September rose to 5.03 dollars a bushel from 4.71 dollars.
RUBBER: Malaysian rubber prices fell after two weeks of gains.
The Malaysian Rubber Board's benchmark SMR20 declined to 289.20 US cents a kilo from 292.05 cents a week earlier on profit-taking amid a lack of fresh leads.
© 2010 AFP