Once again nothing was spared in last week’s selling crunch.
Shares, currencies and commodities were either pounded or pursued, such as the yen and the greenback
Major commodity indices told the story in that sector: the Standard & Poor’s GSCI Index – which tracks the prices of two dozen raw materials including wheat, corn, sugar, copper and lead – has dropped nearly 29% from the start of the month.
The Reuters Jefferies/CRB-Jeffries is off a similar amount. It fell more than 9% and is down 46% from a record in July. (This index is more weighted towards oil.)
The toll was dramatic. Copper fell under $US2 a pound last week, gold slipped to $US680 an ounce on Thursday before bouncing back and then rising further to around $US737 on Friday at the close, still down sharply from the $US911 an ounce when Lehman Brothers failed mid-way through last month.
Gold fell 7.3% last week and is heading for a 17% drop this month, which if it happens by Friday night, would be the worst such performance since March 1980.
So much for the metal’s reputation as a store of value or a ‘safe haven’ in tough times. Not now. It’s the US dollar, or the Yen, and nothing else.
But both currencies will come under growing pressure with US GDP and other figures out this week which will show the economy entering a deep recession, while the yen will be pressured by a possible Bank of Japan rate cut this week and mounting evidence that the country’s economic recession is worsening and becoming deeper than previously thought.
While commodity prices have been falling since mid year (and a bit earlier in the case of gold which hit the all time high of $US1033 an ounce last March, with wheat, Corn and soybeans also earlier highs), the downturn accelerated from mid July as the US dollar started firming and oil started its long plunge which hasn’t halted.
Not even the 1.5 million barrels a day cut from OPEC late last week could stop oil’s weakness from pushing down on world prices.
The greenback was near a 2-year high against the euro on Friday and the yen was stronger against the greenback and the Australian dollar. The Aussie hit a low under 62 USc (around 61.82 USc) on Friday before closing around 62.20 USc in New York.
The US rose 6% to $US1.2623 per euro last week , from $1.3410 on October 17. The currency touched $US1.2497 per euro on Thursday, the strongest since October 2006.
The yen rallied 7.8% to 94.32 to the US dollar from 101.69, and touched 90.93 yesterday, its highest level since August 1995.
Against the euro, the yen climbed 12.7% to 118.96 from 136.21. It touched 113.81 yesterday, the strongest since May 2002. Against the Aussie the yen hit a high of just over 57.75 yen, a fall of more than 12% on the day.
The Aussie’s loss against the greenback was more than 8% at one stage Friday. It fell from 65.40 USc in Sydney a week ago Friday, a loss of nearly 6%, which is a bit better than the plunge during Friday.
In the US aluminum traded around the 94 USc mark, or a bit more, levels not seen since late 2005. Copper settled at $US3,986 a tonne for three month metal on the LME, a far cry from July’s record high of $US8,940 a tonne.
Meanwhile, coffee futures were trading at $1.09 a pound – the lowest price in 14 months and down 17% in October alone.
The last time coffee was at this level was August of last year.
Oil dropped to its lowest price in 17 months Friday, touching $US62.85 a barrel, a 56% drop from oil’s record high of $147.27 in mid-July. December Nymex oil futures in New York ended 5.4% down at $US64.15 a barrel, the lowest since May 31, 2007.
Oil prices have not only more than halved since July, but the futures price in New York is now down 26% on a year ago and the December contract dropped 11% last week.
December corn futures traded around a 10-month low at $US3.73 a bushel on the Chicago Board of Trade and November soybean futures were around $US8.64 a bushel. Wheat hit a 16 month low at one stage.
Wheat futures for December delivery fell 6.75USc to $US5.1625 a bushel in Chicago on Friday after hitting $US4.965, the lowest since May 30 of last year. Wheat is down 62% from the $13.495 set in late February.
Corn futures for December delivery dropped 1% to $US3.8625 a bushel in Chicago after falling to $US 3.72 in early trading. Corn is off 52% since reaching the record high of $US7.9925 a bushel in late June.
January Soybean futures fell 11, or 1.2% to $US8.775 a bushel in Chicago: the price is down 46% from the record $16.3675 a bushel set in early July.
And Palm oil futures in Kuala Lumpur slumped as much as 12% to the lowest level in three years late last week as crude oil dropped. Prices fell to their lowest level since August 2005.
Palm oil for January delivery fell to 1,358 ringgit ($US379) a tonne on the Malaysia Derivatives Exchange, according to newsagency reports.
But there was a bit of good news in one market: LME nickel prices jumped 7%, or $US685 a tonne to $US9866 a tonne after the big nickel producer, Vale (AKA CVRD of Brazil) revealed it was reviewing production and would cut output and maybe delay new projects.
The move by Vale, released in commentary with its latest quarterly report (earnings up more than 60%) pushed nickel as high as $US10.200 a tonne on the LME before it settled down under the $US10,000 level for three month metal.
It’s the first bit of good news for this battered metal in months (remember when it briefly traded around $US55 a tonne more than 18 months ago?).
The news from Vale saw the metal climb from the lowest level since mid 20
