China again showed us its power over commodity prices on Friday.
Gold fell on Friday after China raised bank reserve asset requirements, oil fell as well, but copper rose to record highs off the back of the strong round in Chinese imports of copper ores and scrap metal.
But that news was on Friday.
Saturday’s news of a surge in producer and consumer inflation will have a different impact in that it will pressure commodity markets lower when trading resumes later today.
A sharp rebound in Chinese oil imports couldn’t influence market prices with the US dollar having a strong day and week, but the country’s high level of consumption was singled out as the major influence for oil prices for the next year (next few years, actually, in all reality).
The rise in the value of the dollar didn’t impact copper, as it would have normally done.
Copper traders shrugged off the stronger greenback in fact and copper futures ended at a record close in New York after the Chinese import figures were released earlier in the day.
Comex March copper futures rose 2.5c, or 0.6%, to $US4.112 a pound, the highest close ever.
Yesterday, the metal climbed to $US4.1545, the highest since May 5, 2008, when it touched an intraday record of $US4.2605.
Copper rose 2.8% and is now up 43% since July 1.
Shipments of copper and products into China, the world’s largest user, jumped by almost 30% in November to 351,597 tonnes from October.
Imports for the year so far were up 0.7% to 3.95 million tonnes.
Total imports in the 11 months ended November 30 gained 0.7% to 3.95 million tonnes. Copper has jumped 43% since July 1, partly on demand from emerging markets.
Copper stocks overseen by the London Metal Exchange have dropped every week since late February and are now down 31% for the year so far.
For gold it was a different story as the price fell more than 2% last week and closed lower on Friday as the strength of the US dollar took its toll.
That was its biggest weekly fall in nearly two months.
Spot gold slipped 0.1% to $US1,385.92 an ounce in New York on Friday, down on the record high of $US1,430.95 set on Tuesday.
And Comex February gold futures settled down $US7.90 at $US1,384.90.
Spot silver dropped 0.1% to $US28.65 an ounce on Friday, down from the $US30.68 set on Tuesday.
Oil prices also fell on Friday for a weekly loss as the greenback strengthened.
Oil traders ignored news of the surge in Chinese oil imports (and oil products) and focused on the lift in the bank assets ratio.
Nymex January delivery crude fell 58c to $US87.79 a barrel by the close on Friday, after hitting an early peak of $US89.00 peak.
Despite reaching a 26-month high of $US90.76 on Tuesday, Nymex crude oil futures fell 1.5%.
Friday’s update on US and global crops from the US Department of Agriculture (USDA) didn’t have the impact of similar updates issued in October and November.
They sent grain, soybeans and cotton prices higher.
This time cotton hit a new monthly high in New York, but wheat futures fell the most in three weeks after the report forecast increased US and global stockpiles.
The USDA said global stocks of wheat would be 176.72 million tonnes by next May 31, up 2.4% from November’s forecast.
Interestingly, the USDA raised its crop estimate for Australia by 6.3% despite the rain damage, but also cut its export estimate for Australia by the same amount because of a fall in quality caused by the wet weather.
March wheat futures on the Chicago Board of Trade fell 13c or 1.6% to $US7.755 a bushel.
Wheat was down 0.4% for the week.
It’s still up 61% since late June when news of the massive Russian drought emerged and the country stopped exports until well into 2011.
The USDA raised its forecast for Australia’s wheat production to 25.5 million tonnes.
We get an update tomorrow here in Australia on the size and quality of the crop and its value.
