What a Friday. Gold was down, US stocks fell, the US dollar was mixed, the yen was stronger, oil rose; but the big move was copper: now having its biggest slump in price for five years, a move that should make even the most optimistic BHP and RIO punter pause for reflection.
The rise in the yen introduced a note of uncertainty for investors, while the mood in major markets in Europe and the US was pessimistic.
Gold and oil have been the star commodities of late as both have taken up the mantle of speculative hedges against the US dollar.
But copper is now in the midst of a major downward move reminiscent of what happened a year ago as Chinese consumers cut their imports.
Copper is now having its longest slump since 2002, as growing stocks around the world indicate a drop in demand.
In the US that's because of a slowing economy. In the faster growing economies of Asia, it's probably a combination of adequate stocks and a desire to improve cash flows by curtailing purchases to allow prices to settle lower, and then buying futures to price the metal into the second quarter of next year.
Traders said stocks monitored by the London Metal Exchange rose to a six-month high last week and have now risen 30% since the start of last month.
Helping drive prices lower is the expected slowing in the US economy which will hit a growth rater of half the third quarter's 3.9% in the current three months.
Copper prices are now at the lowest since August.
December copper futures fell 5.85 USc on Friday to $US3.1455 a pound on Comex, after hitting a day's low of $US3.111 a pound.
Based on the close, copper fell 5.4% last week, a significant fall after losing 11% in the previous four weeks. The current five-week slide is the longest since August 2002.
The US is the second largest user of the metal and predictions of a sharp fall again in US housing next year, with no recovery in sight until 2009, had a big negative impact on sentiment. The metal's price could fall below the $US3 a pound mark if the stream of poor news from housing and the wider economy continues. The one thing keeping prices a bit firmer that they might otherwise be is the strong demand from the export sector.
Economists point out that the housing slowdown cut 1.1% off America's third quarter GDP growth figure of 3.9%. At 5% the US would have been running hard and as fast as the Australian domestic economy. Those who say there have been no spillover into the wider US economy are behind the ball. It's happening and it's very real and hurting.
LME copper stocks rose to 172,775 tonnes on Friday, the highest level since April 16. Stocks also rose in China to 59,208 tonnes, according to reports from Shanghai.
As with the end of 2006 and early this year the figure to watch is the size of the stocks: China's rapid lift in buying showed up from late January-February onwards. It's something to watch for again.
Three months copper on the LME fell $US170, or 2.4% on Friday to $7,030 a tonne. Copper prices on the LME are now within sight of the low they touched during the August credit freeze and shake-out.
Gold fell for the first time in more than a week on Friday, but silver rose on the day. Before Friday's fall gold had risen 31%, trading within $US25 an ounce of the record of $US873 for a futures price. The Spot price hit a high of $US850 an ounce.
December Comex gold futures fell $US2.80 to $834.70 an ounce, but was still up 3.2% over the week, a good result given the level of uncertainty about the US economy, US banks and oil's gyrations.
The price climbed to $US848 last Wednesday.
December silver futures rose 3 cents to $US15.545 an ounce on Comex on Friday. It's up 20% so far in 2007.
Traders say gold is headed for the seventh straight yearly gain, the longest winning streak since futures began trading in 1975.
New York crude-oil futures traded as low as $US94.54 a barrel after reaching a record $US98.62, also on November 7.
Oil closed at $96.32 a barrel, up 86c on the day
Wheat recovered losses on Friday to close unchanged after a slightly bullish crop update from the United States Department of Agriculture.
December wheat ended at $US7.62 a bushel on the Chicago Board of Trade after hitting an intra-day low of $US7.4475, the lowest since the end of August.
World wheat prices are still up more than 50% this year, despite tumbling from a record high of $US9.6175 a bushel on the CBOT in September.
The US Department of Agriculture said world wheat supplies will be larger than forecast a month ago with world output now put at 603.3 million tonnes, up from last month's projection of 600.5 million tonnes. It also lifted its year end stocks for May 31 next to 109.8 million tonnes, up from an October prediction of 107 million tonnes, but down from a revised 124.1 million tonnes late last year.
The USDA surprised by boosting its estimate for China harvest to 106 million tonnes, up from 105 million tonnes in last month's forecast.
A year ago, China's crop was 104.5 million tonnes.
The USDA trimmed its estimate for Australia's harvest to 13 million tonnes from 13.5 million tonnes last month because of the continuing impact of the drought. That takes in the latest forecasts from the Australian Bureau of Agricultural and Resource Economics.
The USDA said Argentina will harvest 15.5 million tonnes, up from 14.5 million tonnes in the October forecast and 15.2 million tonnes in 2006.
