If you look at the performance of leading commodities last week then you’d be mistaken for believing that the Fed didn’t change policy last week on interest rates and inflation.
Gold was up, then down on Friday as US house sales rose more sharply than expected in February as prices fell.
Oil eased, and then rose on a combination of factors such as the level of US stocks of petroleum products and then geopolitical worries around Iran.
Nickel rose then fell as the first real flood of metal into stockpiles appeared mid week.
Copper rose, rose and rose and then eased a touch on Friday as demand from China continued to dominate thinking in the market.
And corn and wheat futures prices eased on Friday ahead of the release this week of the first estimate of the 2007 US grain plantings from the US Department of Agriculture (USDA).
Overall the Fed’s significant policy switch was seemingly forgotten, but will be remembered again this week with a far number of important indicators due for release in the US.
But with demand from China dominating so many markets, attention is elsewhere.
For example copper rose the third week in row, with prices reaching their highest levels since December.
Stocks held by the London Metal Exchange fell for sixth week in a row last week thanks especially to imports by China, the biggest user of the metal.
China’s demand continues to underpin the market as it soaks up metal to replace the rundown in copper stocks late last year when prices rebounded after the mid year slump.
China used its own stocks to avoid paying very high prices for the metal but has now been forced back into the market to replenish its position, thereby driving up prices once again.
May Comex copper futures ended at $US 3.069 a lb after touching $US3.133, the highest price since mid-December. Copper prices gained 1.9 per cent last week after jumping 12 per cent over the previous fortnight.
Copper prices have gained 29 per cent in the past year.
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Nickel suffered its biggest fall in more than six months as LME stocks continued to grow.
The metal has surged 27 per cent so far in 2007 to a succession of records and there are now suggestions that this may be forcing users to slow their purchases.
But stocks are low, even after the latest increase and all it could take is for one buyer to aggressively bid for metal on any day and prices could jump again.
The LME stocks rose 14 per cent on Friday to 4,932 metric tons, taking the week’s increase to 38 percent.
But that was after an 85 per cent fall in stocks over the past year. The actual amount of nickel in stock is still small, an estimated two days global consumption at best.
LME nickel prices fell 6.5 per cent on Friday and more than 12 per cent over the week because of the sharp rise in stocks from less than a day’s supply to around two days. Prices had surged 10 per cent the week before.
Helping drive the fall was a 36 per cent rise late last week in the amount margin traders have to put up for each six tonne lot traded on the LME.
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Gold surprised with a sharp fall on Friday after looking set for further gains for most of the week.
It was the first fall in seven trading days for gold and came despite a rise in oil prices and tension in the Middle East.
The sharp rise in US home sales in February was blamed, but most traders said there were some solid profits to be had and they were taken.
April gold fell $US6.90 to $US 657.30 on Comex in New York, after rising around $US21 an ounce over the previous six trading days.
Oil prices finished 59USc higher at $US62.28 a barrel.
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And wheat, corn and soybean futures were all lower ahead of the important crop planting report from the USDA this week.
There has been growing speculation that the sharp rise in corn prices over the past year, mostly driven by demand from the ethanol industry, would result in the largest corn plantings in US history.
The fear is that this in turn will cut plantings of wheat and soybeans by US farmers.
Futures markets are all nervy about the result, especially with Brazil reporting good crops and rain returning to many of the drought areas of Australia in the past month or so.
