Global commodity markets were hit last week by weaker-than-expected manufacturing data in key consumers China and the United States, and news of record high unemployment in the eurozone, but many prices rebounded following the ECB interest rate cut and upbeat US non-farm payrolls data. "It has been a mixed week for commodity markets, with sentiment dominated by macroeconomic data flow and central bank policy action," said Barclays analyst Sudakshina Unnikrishnan.
"A weak China PMI reading weighed on commodities and the base metals in particular, while the ECB cutting its benchmark policy rate by 25 basis points supported prices towards the end of the week. We do not expect any sustained broad-based commodity price gains." The week ended on a more positive note however, following a strong US non-farm payrolls (NFP) report. The US Department of Labour reported on Friday that the US economy added a solid 165,000 jobs in April, well above market expectations.
OIL: Prices faced a rollercoaster ride, falling sharply on weak Chinese data, before bouncing higher. Crude futures had tumbled by almost $2.5 on Wednesday as traders took their cue from fresh signs of economic weakness in the United States and China, and after a US inventory report showed crude stocks at their highest point in more than 30 years.
However, the market then spiked by almost $3 on Thursday, and continued to head higher on Friday in the wake of the NFP numbers. "Oil prices have been very closely linked with economic sentiment over the past couple of days, rising and falling in conjunction with how investors judged economic results," said analyst Gary Hornby at energy consultancy Inenco.
"Oil dropped back below $100 per barrel briefly after Chinese manufacturing PMI data came in worse than expected, before posting the largest daily rise in almost six months, to reach $103 a barrel, after the ECB cut interest rates and US weekly jobless claims fell to five-year lows." Thursday's widely-expected quarter-point interest rate reduction, to a record low of 0.50 percent, is part of the ECB's efforts to help the debt-stricken eurozone escape from recession. It also comes after the US Federal Reserve maintained its stimulative monetary policy stance on Wednesday.
"The recent rebound in crude oil prices is a result of more confidence in the global economy as ECB and Fed decisions to stimulate growth could bring a boost in oil demand for the second half of 2013," noted Sucden analyst Myrto Sokou. Also helping was the weekly US jobless claims report, which came in much better than expected, suggesting some tightness in the jobs market. The Labour Department data showed new claims for unemployment benefits had fallen to a five-year low. The claims - an indicator of the pace of layoffs - fell by 18,000 to 324,000, the lowest level since mid-January 2008.
By Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in June rose to $102.37 per barrel compared with $102.35 a week earlier. On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for June rallied to $95.83 a barrel from $92.18.
PRECIOUS METALS: Prices held steady this week, with gold winning support from its status as a safe store of value. "Gold is profiting from the prospect of cheaper money," noted Commerzbank analysts. "The ECB did not disappoint market players ...and lowered its main refinancing rate as expected. During the press conference, ECB President (Mario) Draghi did not rule out the possibility of further rate cuts. The ECB even expressed a willingness to let its deposit rate become negative."
By late Friday on the London Bullion Market, the price of gold eased to $1,469.25 an ounce from $1,471.50 a week earlier. Silver increased to $24.25 an ounce from $24.02. On the London Platinum and Palladium Market, platinum rose to $1,501 an ounce from $1,483. Palladium advanced to $694 an ounce from $681.
BASE METALS: Base or industrial metal prices enjoyed mixed fortunes, with star performer copper striking a 2011 low on poor Chinese and US data - but it finished with bumper gains. "Copper has staged a strong comeback in the past two days after the metal reached its lowest level since October 2011 on Wednesday as fears of falling demand and threats to growth remained at the forefront of traders' minds," said CMC Markets analyst Matt Basi.
"Those fears have been replaced by cautious optimism today as figures revealed net outflows of copper from LME-registered warehouses." China meanwhile reported a fall in manufacturing activity, with the Chinese purchasing managers index (PMI) dipping to 50.6 in April from 50.9 in March. The PMI is a widely watched indicator of the health of the Chinese economy, with a reading above 50 indicating expansion while anything below that points to contraction.
In addition, a key index on US manufacturing activity in the Chicago area unexpectedly dived into contraction territory in April. By Friday on the London Metal Exchange (LME), copper for delivery in three months jumped to $7,267 a tonne from $7,085 a week earlier.
----- Three-month aluminium fell to $1,878 a tonne from $1,901.
----- Three-month lead eased to $2,023 a tonne from $2,034.
----- Three-month tin fell to $20,170 a tonne from $20,850.
----- Three-month nickel slid to $15,080 a tonne from $15,300.
----- Three-month zinc edged down to $1,882 a tonne from $1,900.
COCOA: Cocoa futures struck their highest levels since mid-December on persistent worries about supplies from leading producers in west Africa. "The flow of Cocoa from western Africa is down for seasonal considerations, and traders wonder about the quality and size of the mid crop after some hot and dry weather during the growing season," said analyst Jack Scoville at Price Futures Group.
By Friday on Liffe, London's futures exchange, cocoa for delivery in July rose to £1,577 a tonne from £1,552 a week earlier. On New York's NYBOT-ICE exchange, cocoa for July advanced to $2,418 a tonne from $2,370.
COFFEE: The market edged higher in muted trading week amid the May Day holiday in much of Asia and Europe. "Much of the coffee world had the day off for May Day and the lack of participation was reflected in the price action," noted Scoville. "Prices in general have been weak as traders anticipate another big crop out of Brazil starting (in) the summer." By Friday on NYBOT-ICE, Arabica for delivery in July climbed to 138.45 US cents a pound from 136.80 cents a week earlier. On Liffe, Robusta for July rose to $2,016 a tonne from $1,977.
SUGAR: Prices touched a new three-year low at 17.13 US cents per pound, hit by Chinese demand worries and expectations of a record sugar harvest in Brazil. "Concerns that demand from China may start to diminish because of weak manufacturing data from the country were ... bearish," noted analysts at industry publication Public Ledger. By Friday on NYBOT-ICE, the price of unrefined sugar for delivery in July firmed to 17.45 US cents a pound from 17.44 cents a week earlier. On Liffe, the price of a tonne of white sugar for August dipped to $497.90 from $501.40.
RUBBER: Prices inched higher amid hopes of a spike in global demand. The Malaysian Rubber Board's benchmark SMR20 rose to 248.10 US cents a kilo from 246.00 cents the previous week.
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