commodities make bright start to 2006
Almost all commodities make bright start to 2006
LONDON, Jan 7: Almost all commodities saw their prices boosted in the first week of 2006 by keen global demand as investors returned in force following the Christmas and New Year holiday.
The price of copper hit another historic record and sugar struck multi-year peaks, while oil prices reached the best levels for three months.
Cocoa and coffee prices, meanwhile, rose to multi-month highs.
Reflecting the strength of demand for raw materials, the Commodities Research Bureau’s index of 17 commodities hit a historical record of 338.86 points on Friday.
The index later Friday stood at 338.61 points from 328.20 points the previous week.
GOLD: Gold prices forged upwards, but remained below the 25-year high of 541 dollars reached on December 12.
“The precious complex remains very upbeat with the combination of positive supply/ demand fundamentals, good physical and growing investor demand,” said James Moore, analyst with specialist metals website TheBullionDesk.com.
On the London Bullion Market, gold prices rose to 535.25 dollars per ounce at Friday’s late fixing from 513 dollars the previous week.
SILVER: Silver prices steadied.
“Silver may test recent highs although we are concerned that any profit-taking could hit silver very hard as there is little fundamental demand at the current levels,” UBS analyst John Reade said.
Before profit-taking set in, the price of silver had hit 9.25 dollars per ounce on Wednesday, not far from the 18-year peak of 9.27 dollars reached in mid-December.
On the London Bullion Market, silver prices rose to 8.83 dollars per ounce at Friday’s fixing, unchanged from the previous week.
PALLADIUM AND PLATINUM: Platinum and palladium prices increased in reaction to a weaker dollar.
“Platinum has started 2006 staging a strong rally, prompted by renewed weakness in the US dollar,” analysts at Deutsche Bank said.
The weaker US currency makes dollar-denominated commodities more attractive to buyers using other currencies on world markets.
BASE METALS: Base metals prices were also lifted by investment fund buying, with the price of copper notching up a fresh record.
“The fund buying is back in force,” said William Adams, analyst with specialist website BaseMetals.com.
On the London Metal Exchange, three-month copper prices jumped Wednesday to 4,576 dollars per ton — the highest level since copper was first listed in its current format in 1870. The price of copper had leapt by almost 50 per cent during 2005.
On Friday, three-month copper prices on the London Metal Exchange firmed to 4,436 dollars per ton from 4,433 dollars the previous week.
Three-month aluminium prices eased to 2,279 dollars per ton from 2,285 dollars.
Three-month nickel prices surged to 14,325 dollars per ton from 13,480 dollars.
Three-month lead prices gained to 1,085.50 dollars per ton from 1,058.50 dollars.
Three-month zinc prices increased to 1,943.50 dollars per ton from 1,917 dollars.
Three-month tin prices climbed to 6,675 dollars per ton from 6,600 dollars.
OIL: Crude prices hit three-month high points on Friday, supported by the Russia-Ukraine gas dispute and renewed geopolitical tensions in the oil-rich Middle East, analysts said.
Such concerns offset data revealing high inventories of US energy, as well as expectations of milder weather in the US northeast region, the biggest consumer of heating fuel.
“Forecasts of cold weather in Europe will keep prices firm... as well as concerns about stability in the Middle East,” analysts at the Sucden brokerage firm said.
Oil futures have risen more than 10 per cent in a week, largely owing to a Russia-Ukraine gas price dispute that was resolved Wednesday. On Friday they struck 64.15 dollars per barrel in New York and 62.68 dollars in London — the highest points since October.
They have received additional support from concerns about peace in the oil-rich Middle East, with Israeli Prime Minister Ariel Sharon clinging to life on Friday after suffering new bleeding in his brain.
RUBBER: Rubber prices fell amid rainy weather in Thailand, the world’s biggest producer.
“Prices have stopped rising although the latex market remains very steady because of poor weather conditions in Thailand where there has been a lot of unseasonal rains,” said Rashid Ahmed, a trader with Corrie MacColl.
Rain lowers output as farmers find it more difficult to collect latex.
SUGAR: Sugar prices reached the highest level for 11 years in New York and hit a nine-year record in London as speculators ploughed into the market.
“The underlying bullish mood continues to support the market with... speculator fund flows continuing to flow into commodities including sugar,” Sucden analysts said.
In London on Friday, prices reached 361 dollars per ton, the best level since January 1997. In New York the same day, prices reached 15.10 cents per pound, the highest point since January 1995.
GRAINS AND SOYA: Soya and grain prices rose as traders fretted over dry weather conditions in South America.
“Next week we are going to watch the weather in Argentina,” said Victor Lespinasse, analyst with AG Edwards.
“Bird flu will also be a concern and could be bearish for the market,” he added.
Fears over the avian flu virus has the potential to weaken demand for grains and soya, owing to the culling of poultry which feed on the food.
Turkey said Friday a third child from the same family had now died of bird flu, as its government came under fire for failing to prevent the spread of the deadly disease, which has killed scores in Southeast Asia and China.
COTTON: The price of cotton rose, as investment buying and a weaker US dollar offset a 62-per cent slump in US export sales in the week to December 29.
The report was put to one side and the market was more interested in the weaker US dollar, according to an anonymous analyst at a European bank.
On the New York Cotton Exchange (NYCE), the March contract rose to 54.69 US cents per pound on Friday, compared with 54.19 cents a week earlier.
The Cotton Outlook Index of physical cotton stood at 58.10 cents on Thursday, from 57.40 cents the previous week.
WOOL: The wool market remained closed this week in Australia, the world’s biggest exporter of the commodity. It reopens on January 9.
The Australian Eastern index had closed at 6.33 Australian dollars per kilo on Thursday December 15.
The British Wooltops index, meanwhile, stood at 396 pence on Thursday, compared with 393 pence the previous week.—AFP
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