LONDON - Commodity prices largely rose this week in quiet trade, but with gold set for its first annual drop since the start of the millennium.
PRECIOUS METALS: The complex was dominated by gold, which barring a late price surge, will suffer a first yearly loss since 2000. Sister metal silver, which tends to track gold’s movement, has shed a third of its value in 2013. Gold’s value has slumped 27 percent this year on weaker demand and easing inflation-snapping twelve years of uninterrupted annual price growth.
“The risk is for further price downside ahead,” said analysts at Barclays. “The main problem for gold is that with Indian demand soft because of the weak rupee plus new import duties, the physical market is struggling to offset investor liquidation, even during recent festival seasons when physical demand is usually strong.” The government of top gold consumer India has hiked the metal’s customs duty three times this year to curb imports and rein in its current account deficit.
Gold had in June hit a three-year low at $1,180.50 an ounce on the prospect of stimulus tapering by the US Federal Reserve. It came close to matching that level at the end of last week as the US central bank ended months of speculation by finally announcing it would start to scale back its stimulus next month. Gold has fallen back sharply from a record high of $1,921.15 an ounce recorded in September 2011, when investors rushed to snap up the precious metal on fears of a fresh global recession amid the eurozone debt crisis.
By late Friday on the London Bullion Market, the price of gold rose to $1,214.50 an ounce from $1,195.25 a week earlier. Silver climbed to $19.92 an ounce from $19.33.
On the London Platinum and Palladium Market, platinum increased to $1,374 an ounce from $1,328. Palladium advanced to $711 an ounce from $700.
BASE METALS: Industrial metals prices rebounded strongly this week, in some cases reaching multi-month highs, putting a shine on a turbulent year for the likes of aluminium and nickel.
“Unless some kind of miracle happens, metal prices will end the year 2013 significantly down, the losses having been incurred in the first half of the year,” noted analysts at Commerzbank. “Essentially, there were two reasons for this: firstly, China presented disappointingly weak economic data (...) Secondly, a discussion began about the fact that the US Federal Reserve might already begin scaling back its bond purchasing programme in the near future. This also put metal prices under pressure even though they hadn’t previously profited from” the latest stimulus. By Friday on the London Metal Exchange, copper for delivery in three months rose to $7,385 a tonne from $7,241 a week earlier.
Three-month aluminium decreased to $1,784 a tonne from $1,789 Three-month lead grew to $2,265 a tonne from $2,205. Three-month tin gained to $22,949 a tonne from $22,871. Three-month nickel fell to $14,344 a tonne from $14,360. Three-month zinc advanced to $2,096.75 a tonne from $2,032. Oil rises but Brent steady in 2013
OIL: Crude futures rose this week, with support coming from positive US economic data and violent unrest in South Sudan, traders said. US oil prices rose above $100 a barrel ahead of the Department of Energy’s weekly release on the nation’s oil inventories.
Traders have been keeping an eye on developments in South Sudan, which has been rocked by a wave of deadly ethnic violence. Analysts say the conflict threatens the young nation’s oil output.
Robert Yawger, director of energy futures at Mizuho Securities, said South Sudan usually exports about 220,000 barrels a day to Japan, Malaysia and China. Oil gained also this week after a US Department of Labor report showed first-time claims for unemployment benefits fell to 338,000, below the 350,000 forecast by analysts. The better jobless claims report came on the heels of other recent strong US data on third-quarter growth, durable goods orders and other items that suggest a healthier economy. “The improving US economy and signs the global economy is steady has been driving prices higher,” said Gene McGillian, broker and analyst at Tradition Energy. Brent crude is virtually unchanged over the year, while New York futures have risen more than 12 percent, amid tight supply concerns earlier in the year caused by the threat of US military action on Syria. But prices were kept in check by weaker Chinese economic data that raised doubts about global demand.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in February grew to $111.83 a barrel from $111.44 a week earlier. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for February rose to $99.62 a barrel from $98.92.
Cocoa ends strong year with fresh highs
COCOA: Futures ended the year by recording the highest points since September 2011 - at £1,809 a tonne in London.
“In contrast to the prices of many other agricultural products, cocoa prices have risen sharply in 2013 and meanwhile reached two-year highs in both New York and London. This is attributable to the growing conviction that both in 2012/13 and the current year 2013/14 there will be an undersupply in the cocoa market.” Cocoa prices rose by a quarter during the year. By Friday on LIFFE, London’s futures exchange, cocoa for delivery in March dipped to £1,788 a tonne from £1,791 a week earlier. On ICE Futures US, cocoa for March increased to $2,815 a tonne from $2,801.
SUGAR: Prices traded narrowly mixed this week, having fallen by around 15 percent in 2013.
“Although the 2013/14 production surplus will probably be only half the size of the previous year, the sugar market will remain very well supplied for the time being,” said analysts at Commerzbank.
“Given the outlook for a further reduction of supply in 2014/15, there could be a moderate rise in prices in the course of 2014.” By Friday on LIFFE, the price of a tonne of white sugar for March climbed to $444.10 from $442.40 a week earlier.
On the ICE Futures US exchange in New York, the price of unrefined sugar for delivery in March fell to 16.32 US cents a pound from 16.42 cents.
COFFEE: Prices were mixed this week.
“Following a strong year of production in 2013, Arabica prices are expected to experience further downside during 2014,” Rabobank said in a note to clients. “Following a record large crop in Vietnam, Robusta prices will likely weaken during the first half of 2014,” it added. By Friday on the ICE Futures US exchange, Arabica for delivery in March climbed to 117 US cents a pound from 115 cents a week earlier. On LIFFE, Robusta for March fell to $1,699 a tonne from $1,711.
RUBBER: Prices dipped this week on slow trade amid the festive season and on rising inventories, trader said. The Malaysian Rubber Board’s benchmark SMR20 slipped to 229.25 US cents a kilo from 230.20 cents the previous week.