Commodity markets mixed amid poor US GDP data

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Commodity prices traded mixed this week as investors digested news of a sharp slowdown in economic growth in the United States, which is a major consumer of raw materials.

Coffee was the star performer, striking a 12-year pinnacle in New York as speculative buyers dived into the market.

Official data showed Friday that US growth slowed dramatically to 2.4 percent in the second quarter from an upwardly revised 3.7 percent in the first three months of 2010.

The number was slightly lower than market expectations of 2.5 percent, but nevertheless it suggested that the brakes may have been slammed on an already tepid recovery.

However, Sucden analyst Atilla Widnell cautioned against reading too much into the data.

"While the US second-quarter GDP was only slightly lower than expected, these figures may only have had a short-term negative impact on commodity prices," Widnell said.

"Many investors are likely to be watching for forward-looking data to grasp an idea of the general direction of the global economic recovery, rather than focusing too much on backward-looking figures," he added.

OIL: Crude oil prices fell this week after a steady start as tropical storm Bonnie departed the Gulf of Mexico, which is home to many energy installations.

The market plunged on Tuesday after a key survey showed US consumer confidence slumped to the worst level in five months.

Losses were extended mid-week after a huge unexpected jump in US crude stockpiles added to nerves over the economic outlook.

The US Department of Energy said crude oil inventories jumped 7.3 million barrels last week in the United States, a top energy consuming nation, suggesting weaker demand. Analysts had expected a drop of 1.4 million barrels.

Oil prices recovered on Thursday on the back of a weaker dollar and positive European data.

The euro soared past 1.31 dollars, its best showing since early May, on reports of strengthening eurozone confidence and an improvement in Germany's employment picture.

A weaker US currency makes dollar-denominated oil cheaper for holders of rival units.

Heading into the weekend, market sentiment took another hit from the US GDP data.

"The price has dipped, taking into account the US GDP result, (as) the market responded with bearish sentiment," noted analyst Rebecca Seabury at energy consultancy Inenco.

By late Friday on the New York Mercantile Exchange, Texas light sweet crude for delivery in September dipped to 77.67 dollars a barrel, from 78.72 dollars the previous week.

On London's Intercontinental Exchange, Brent North Sea crude for September delivery slipped to 77.04 dollars compared with 77.30 dollars the previous week.

PRECIOUS METALS: Prices diverged, with gold falling as the glamorous metal lost its safe-haven appeal amid easing inflation concerns.

"The recent weakness in gold prices ... mainly reflects lower demand for the precious metal as a safe haven or inflation hedge," said Capital Economics analyst Julian Jessop.

Gold is traditionally regarded as a safe store of value in times of higher inflation.

By late Friday on the London Bullion Market, gold fell to 1,169 dollars an ounce from 1,190.50 dollars the previous week.

Silver slid to 17.66 dollars an ounce from 18.17 dollars.

On the London Platinum and Palladium Market, platinum climbed to 1,555 dollars an ounce from 1,541 dollars.

Palladium increased to 487 dollars an ounce from 460 dollars.

BASE METALS: Prices advanced across the board.

"Base metals continue to benefit from the persistently high risk appetite of market participants," said Commerzbank analyst Eugen Weinberg.

By Friday on the London Metal Exchange, copper for delivery in three months had jumped to 7,225 dollars a tonne from 7,030 dollars a week earlier.

Three-month aluminium leapt to 2,134 dollars a tonne from 2,038 dollars.

Three-month lead rose to 2,050 dollars a tonne from 1,950 dollars.

Three-month tin rallied to 19,540 dollars a tonne from 18,879 dollars.

Three-month zinc increased to 1,991 dollars a tonne from 1,926 dollars.

Three-month nickel climbed to 20,635 dollars a tonne from 20,425 dollars.

COCOA: Cocoa prices enjoyed mixed fortunes in subdued trade.

By Friday on LIFFE -- London's futures exchange -- the price of cocoa for delivery in September eased to 2,279 pounds a tonne from 2,302 pounds the previous week.

On the New York Board of Trade (NYBOT), the September cocoa contract firmed to 3,070 dollars a tonne from 2,967 dollars.

SUGAR: Sugar prices witnessed modest gains.

By Friday on NYBOT, the price of unrefined sugar for delivery in October increased to 18.30 US cents a pound from 17.19 cents the previous week.

On LIFFE, the price of a tonne of white sugar for October rallied to 555 pounds from 527 pounds.

COFFEE: Coffee futures soared, striking a 12-year peak in London on keen demand from speculative buyers.

"New York led the way under speculative demand," said analyst Ralph Hawes at Sucden.

New York Arabica coffee jumped as high as 178.75 cents on Friday, reaching the best level since February 1998.

London Robusta meanwhile touched 1,810 dollars, which was the highest level since October 2008.

By Friday on LIFFE, Robusta for delivery in September stood at 1,786 dollars a tonne, up from 1,724 dollars the previous week.

On NYBOT, Arabica for September increased to 175.25 US cents a pound from 166.70 cents.

GRAINS AND SOYA: Wheat prices surged higher on the back of stretched supplies.

"Wheat prices have hit their highest level in 13 months and are up ... on the ongoing drought in key Black Sea producer-exporter states -- Russia, Ukraine and Kazakhstan," said Barclays Capital analysts.

By Friday on the Chicago Board of Trade, maize for delivery in December rose to 3.98 dollars a bushel from 3.84 dollars the previous week.

November-dated soyabean meal -- used in animal feed -- increased to 9.95 dollars from 9.81 dollars.

Wheat for September rallied to 6.37 dollars a bushel from 5.96 dollars.

RUBBER: Malaysian rubber prices advanced.

The Malaysian Rubber Board's benchmark SMR20 edged up to US 290.85 cents per kilo, from 286.0 cents last week.


© 2010 AFP

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