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LONDON: Global commodity prices slumped this week as
speculators rushed to bank profits amid concern that demand for oil
and metals will slide should the world economy dampen because of the
US housing crisis.
“All markets remained softer
after mounting fears of a global credit crunch rippled through
commodity markets,” analysts at BaseMetals.com said on Friday.
Nervous speculators sold
commodities amid big sell-offs across global equity markets on
Thursday and Friday, switching investments to the dollar and yen,
which are seen as safe havens in times of financial instability.
Losses in the US subprime
mortgage market—high-risk property loans to which many US banks
and investment funds are exposed—is showing signs of spreading to
other regions.
Oil: World oil prices dived, with
a barrel of Brent below $69 for the first time since June, on
concern that energy demand may weaken amid the US subprime crisis.
“Demand [of energy] could be
the surprising variable that could warrant more attention in the
weeks and months ahead,” MF Global analyst Edward Meir said.
“Should it weaken in the wake
of a credit-induced retrenchment, it could undo the various upward
price spirals we have been seeing.”
The New York contract had soared to an historic high of $78.77
a barrel in trading last week, on news of declining crude stockpiles
in the United States, the world’s biggest consumer of energy.
Crude futures are meanwhile
sliding despite the US Department of Energy (DOE) reporting on
Wednesday that crude inventories fell by 4.1 million barrels to
340.4 million barrels in the week ended August 3.
Despite falling crude
inventories, the International Energy Agency on Friday called on
OPEC nations to increase oil production to cope with an expected
surge in winter demand in the northern hemisphere.
The IEA said in its monthly
report that the main oil producers would have to release an extra
2.5 million barrels a day in the final quarter to keep up with
higher than expected global demand.
The Organization of Petroleum
Exporting Countries is to meet in Vienna in September to make a
decision about whether to change its output quota, but members have
insisted that the oil market is well supplied.
Gold: Gold prices dipped as the
dollar rose. A stronger US unit hurts demand for dollar-denominated
commodities, such as gold, because they become more expensive for
buyers holding weaker-performing currencies.
“That gold is not being seen as
a safe haven is a worrying sign for the yellow metal,” BNP Paribas
analyst David Thurtell said.
“To be fair though, some of
gold’s losses probably derived from selling motivated purely by
the need to cover losses in other markets,” he added.
On the London Bullion Market,
gold fell to $668.50 an ounce at Friday’s late fixing, from
$670.50 a week earlier.
Base metals: The prices of major
base metals dropped, with the exception of tin, which hit an
all-time high above $17,000 a ton.
“Investors are getting out of
the more risky positions, and metals, as commodities in general, are
the assets with the highest risk return ratio,” Calyon analyst
Michael Widmer said.
The price of tin, however, struck
an historic peak owing to tight supplies of the base metal.
On the London Metal Exchange (LME)
the price of tin for delivery in three months reached $17,050 a
ton—the highest point since 1989 when it was re-introduced on the
London market.
“I think there’s a general
feeling that as unreported [tin] stocks are run down further
there’ll be a shortage of material,” BNP Paribas analyst David
Thurtell said.
On Friday, the price of copper
for delivery in three months recoiled to $7,400 a ton on the London
Metal Exchange, from $7,785 a week earlier.
Three-month aluminum prices fell
to $2,599.50 a ton, from $2,675. Three-month nickel prices dropped
to $26,100 a ton, from $28,600. Three-month lead prices slid to
$2,785.25 a ton, from $3,300.
Three-month zinc prices decreased
to $3,250 a ton, from $3,410. Three-month tin prices rose to
$16,352.50 a ton, from $16,237.
Coffee: Coffee prices dropped in
London but climbed in New York. By Friday on the LIFFE, Robusta
quality for September delivery retreated to $1,816 a ton, from
$1,836 one week earlier. On the NYBOT, Arabica for September
delivery advanced to 119.00 US cents a pound, from 117.70 cents.
Grains and soya: Grains and soya
prices extended gains, lifted by strong demand and favorable weather
conditions.
“It has been a relatively quiet
week with mostly steady volume,” Allendale analyst Joe Victor
said.
“But we are ending a little bit
higher, primarily because of the demand for US wheat and the
weather.”
By Friday on the Chicago Board of
Trade, the price of maize for September delivery rose to $3.32 a
bushel, from $3.27 a week earlier.
Wheat for September delivery
gained to $6.70 a bushel, from $6.53.
August-dated soyabean meal—used
in animal feed—climbed to $8.59, from $8.45.
On the LIFFE, the price per ton
of wheat for November delivery jumped to 145.00 pounds, from 133.75
pounds.
Sugar: Sugar prices melted.
“London is leading the way down and, despite oversold conditions,
selling continues to flow in. This is mainly due to the availability
of supplies with no apparent destination,” Sucden analysts said.
By Friday on the LIFFE, the price
a ton of white sugar for October delivery sank to 280.20 pounds,
from 299.80 pounds a week earlier.
On the NYBOT, the price of
unrefined sugar for October delivery declined to 9.62 US cents a
pound, from 10.23 cents a week earlier.
 --AFP
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