Fed chair, Janet Yellen’s speech on Friday night failed to rattle commodity markets – even as it helped to push the value of the US dollar higher.
In fact she was aided by a speech from Fed deputy chair, Stanley Fischer, who is anything was a bit more certain that the case was there for an increase in US rates – but there were not hints on when that case might become clearer.
As a result commodities were mostly steady to a touch weaker (but not zinc which jumped sharply in London), or wheat which fell to decade lows in Chicago.
US oil futures managed to hold on to a modest gain on Friday night, our time, but finished well off the session’s highs as the greenback moved sharply higher.
October West Texas Intermediate crude futures rose 31 cents, or 0.7%, to settle at $US47.64 a barrel in New York.
They were trading at $US47.39 before Yellen’s speech and touched highs above $US48 as she spoke.
For the week, US futures prices lost about 3% after three weeks of gains.
In London, October Brent futures rose 25 cents, or 0.5%, to $US49.92 a barrel, down from session highs above $US50 and finishing around 1.9% lower for the week.
Baker Hughes said Friday there was no change last week in the 406 active rigs drilling for oil in the US. That was the first time in nine weeks there had been no increase in that figure, which had risen from 316 in late May-early June.
US gold futures settled modestly higher on Friday, trimming early gains as investors wondered about the impact of the Yellen and Fischer comments. The rise came despite a firming in the value of the greenback.
December Comex gold rose $US1.30, or 0.1%, to settle at $1,325.90 an ounce on Friday.
US gold futures fell about 1.5% for the week, the biggest weekly drop in five weeks.
Meanwhile, Comex December silver rose 13 cents, or 0.7%, to $US18.745 an ounce, for a weekly loss of 3.6%. But copper has a rough week. While it rose slightly on Friday to $US2.085 a pound on Comex, the contract lost around 4.3% over the week.
In Chicago the sell off in grains and oil seeds saw wheat his decade lows on the Chicago Board of Trade on Friday night, our time, which will bad news for our winter crop which is expected to be near record levels.
Benchmark Chicago soft red winter wheat futures on Friday fell under the $US $4 a bushel level, the lowest price since September 2006.
Chicago soft red wheat and hard winter wheat, have both declined about 20%. Huge stocks and solid production from Australia, Canada, Russia and the US, have helped drive prices lower this year, especially since June. And in London, zinc hit a 15 month high on Friday night, our time, as shorts were forced to cover their positions as the price rose strongly.
Reuters said volumes were huge, with zinc turnover on the London Metal Exchange (LME) of over 17,000 lots, more than double the activity in aluminium, one of the most active contracts.
LME zinc rose to its highest since May of last year, hitting $US2,333 a tonne before easing a little.
It ended around $US2,314, taking this year’s gains to 44%.
Other LME metals ended mixed after Janet Yellen’s comments.
LME copper lost 0.2% to at $US4,615 a tonne (it was above $US5,000 a tonne a month or so ago); LME nickel lost 0.5% to $US9,800 a tonne, bringing it down by about 5% over the week for its biggest weekly drop since March. Aluminium fell a touch, lead rose and tin hit its highest level since February last year at $US18,890 a tonne.
