Another strong week for commodities with gold nudging closer to the $US700 an ounce mark, copper rising through the $US3.60 /lb range and oil back over $US64 a barrel. Wheat was strong on the renewed worry about water in Australia, corn fell in the US though as did sugar while other base metals were on the whole firmer.
New York gold futures jumped sharply on Friday night (Australian time), rising $US7.50 to $US695.80 an ounce on Comex.
Gold rose almost one per cent last week, the seventh straight weekly gain after touching an intra day high of $US698, the highest in 11 months.
Silver fell one per cent last week, despite a 22 USc rise on Friday to a close of $US13.955 an ounce.
Oil prices edged higher, closing at $US64.11 a barrel in New York, for West Texas Intermediate crude (WTI).
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Copper though was where most of the attention and action was centred.
The metal has become a proxy for China’s economic performance, as it was a year ago. New York copper futures rose for the seventh straight week, driven this time by the industrial dispute at Indonesia’s huge Grasberg mine in West Papua, the world’s second largest.
Owners Freeport-McMoRan Copper & Gold said in a statement Friday the mine was operating at a reduced rate of around 20 per cent of rated daily capacity.
These comments saw buyers chase metal to build up stockpiles in case the mine’s production was cut for a prolonged period. Grasberg supplies around four per cent of the world’s copper production each year.
Comex copper futures for July rose 2.6 USc $US3.621/lb on Comex on the New York Mercantile Exchange.
The price rose 2.4 per cent last week and is now up a massive 35 per cent over the last seven weeks. It is now 42 USc/lb away from the all time high of $US4.04/lb on May 11, 2006.
London Metal Exchange copper stocks fell Friday by just under one per cent to 169,075 tonnes, the lowest since early last December. Three month copper on the LME rose $US135 to$US7960 a tonne in late trading, up 3.3 per cent over the week.
Figures released last week showed that copper output exceeded demand by 115,000 tonnes in this year’s first two months, according to the World Bureau of Metal Statistics. And a users group has forecast this surplus could rise to 275,000 tonnes by the end of 2007.
Figures like that would normally have knocked the chocks away from the metal’s pricing in world markets late last week but it is a measure of the perceived influence of Chinese buying that prices rose. Some commentators claim though that the surplus is being funnelled straight into China and not through markets, such is the strength of demand
Tin rose to a record of $US15,2000 a tonne and then fell more than four per cent by Friday to close at $US13,750 a tonne, nickel rose towards the $US50,000 mark again, closing 5.2 per cent up at $US48,900 a tonne, LME stocks are around 2,900 tonnes.
Among the agricultural commodities wheat jumped sharply in the US after Prime Minister John Howard’s dramatic comments about the drying up of the Murray-Darling and the threat to irrigation later this year.
May wheat futures rose 4.9 per cent to $US5.14.75 a bushel in Chicago on Friday on the news about Australia and reports of frost damage to US plantings from a big freeze last week.
Corn futures fell 2.5 per cent last week but are still are up 58 per cent from a year ago on the higher demand from corn-based ethanol producers.
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And food companies such as confectionery groups, snack food makers and the likes of Coca Cola and its offshoots around the world (Coca Cola Amatil) will be very interested in the continuing weakness in world sugar prices.
New York prices fell last week, the sixth loss in seven weeks thanks this time to fears that the Brazilian harvest will be much larger than forecast.
According to a Brazilian government statistics office, Brazil is expected to harvest a record 491.5 million tonnes of sugarcane this year and global sugar output may now grow 5.8 per cent over the rest of the year to be in surplus by around 8.5 million-tonnes by September, at the top end of most forecasts from groups like the International Sugar Organization.
Sugar for July delivery finished at 9.49 USc/lb in New York on Friday, down 3.9 per cent in the past week and 45 per cent in the past year. There are forecasts it could hit 8.5USc/lb in mid to late June.
