Apart from oil and perhaps copper, not much in the way of good news on Friday for commodities followers and resource companies.
After a big booming couple of days trading at the start of last week, it ended in something of a whimper. Gold went backwards as financial fears Thursday and Friday made it problematic and expensive to be short or long on the metal; oil rose Friday and then settled back; copper finished a touch firmer. Nickel and aluminium were also higher in London.
Agricultural all fell from all time or recent highs set earlier in the week. The losses on Thursday and Friday were large.
April oil futures in New York fell 32 USc to settle at $US105.15 a barrel, after touching an all-time intra-day high of $US106.54. Oil prices had ended Thursday at a record closing high of $US105.47.
Comex April gold futures fell $US2.90 to $US974.20 an ounce. Gold prices, along with other dollar-traded commodities, had seen big price rises up till Thursday when they started falling, despite the US dollar continuing to final new lows against the Yen and the euro.
Traders reckon it was the fear of financial problems erupting at a bank or other major group that saw many non-trade investors retreat Thursday and Friday.
US bonds rallied, with the yield on the 10-year security dropping to 3.54% from 3.58% late Thursday as investors sought the relatively safer haven of government debt, and 3.53% on Friday.
After the dollar touched a fresh record low against the euro on the weak jobs report and fell to its lowest level versus the yen in three years it then rallied late on Friday, sending oil and gold lower.
Gold is still up 16% this year, but each time there’s a bout of nervousness about the solvency of the credit markets or financial group it falls away.
Overall, gold hit a day’s high of $US990.70 on Friday and a low of $US971 and ended a mere 80c lower over the week.
Gold reached a record Wednesday and fell, and it was a similar experience for platinum, corn and soybeans which also fell from their highest prices ever, while cotton, sugar and coffee also declined. .
Silver also finished with a small gain, up 2.5c at $US20.25 an ounce. It reached an all time high of $US21.325 on Thursday: the price is up 36% in 2008.
Dealers said oil was also hit by the poor February jobs figures as well as the late rise in the value of the dollar.
Nymex April oil fell 32c to $US105.15 a barrel after hitting the intra-day high of $US106.54 a barrel. Prices rose 3.3% last week and are 70% higher than a year ago.
Brent crude for April settlement eased 23c in London to close at $US102.38 a barrel.
The US Energy Department reported last week that American fuel demand averaged 20.6 million barrels a day in the past four weeks, down 3.4% from the same period of 2007.
Like most agricultural commodities markets, Corn had a mixed week, hitting records and then falling .
The US Department of Agriculture produces its monthly world crops report which will update us on estimates of plantings in the US and around the world, and production estimates for wheat, corn, soybeans, rice, oilseeds and cotton.
It’s out Tuesday and will update us also on whether US farmers will be switching from corn to soybeans and wheat, or from wheat into soybeans and corn, and whether cotton plantings will be lower because of increased plantings of soybeans.
We will also have a good idea of world and US stocks, already at multi-decade lows for key grains like corn, wheat and soybeans.
May corn futures fell the exchange limit of 20 USc, or 3.5%, to $US5.4725 a bushel in Chicago and the most-active contract dropped 1.7% last week, the first weekly decline since the end of November.
Corn prices had reached a record $US5.7425 on March 5, after jumping 34% over the past year on record demand for use in ethanol and livestock and poultry feed. There seems to be some belief that US demand for ethanol might be easing, and the food/ethanol trade-off might be becoming a political issue in an election year.
US bread and pastry companies are reformulating their consumer products by cutting the amount of high protein hard wheat in break, rolls, cakes, pasta etc and substituting more lower protein and cheaper wheat. Smithfield Foods, the world’s biggest pig producer said last week the rising cost of corn feed had caused it to cut the size of its breeding herd by 5% this year to lower costs.
As decisions go that’s pretty silly but looking at it from the company’s point of view, it will have fewer snouts to feed and hopefully lower costs. But unfortunately that will mean fewer pigs in the next year or so, driving up prices, which in turn will force consumers to pay more and add to inflation, and hopefully allow the company to recover the higher costs..
Feeder-cattle futures dropped to a five-week low last week and are 13% off the record of last September as rising feed prices mean less demand from feedlots.
Besides corn, soybeans is where a lot of the market action has been in recent weeks and the slump Thursday and Friday saw profit taking dominate.
Driving this was the initial news that China had cancelled some contracts to buy soybean oil (it might be getting too expensive).
So soybeans fell the maximum allowed by the Chicago Board of Trade, capping the biggest weekly loss since July 2005.
Importers scrapped the deals after domestic Chinese prices of the vegetable oil fell 5.7% from a record last week. Against that it’s not unusual that the Chinese have cancelled some higher priced contracts.
Soybean futures for May delivery fell the exchange limit of 50 USc, or 3.4%, to $US14.0875 a bushel: that was down 8.3% last week.
Soybeans rose to a record $15.8625 a bushel on March 3. The most-active contract has jumped 90% in the past year as US farmers planted fewer soybeans than in more than a d
