Commodities rode a rocky ride in 2008, with crude oil, gold and base metals hitting historic peaks on supply woes, before tumbling as a global financial crisis sparked demand worries. "Commodity markets have had to cope with a complete reshaping of the economic landscape, and in a very short space of time have priced in expectations of a recession in both the global economy and demand," Barclays Capital analysts wrote in a research note.
They added: "Although the pace of decline in commodity prices has slowed in December, there is still potential downside risk to prices should financial markets remain unstable and global growth projections be cut further." After a hectic 2008, most commodity markets began winding down for the Christmas and New Year holidays on Friday, December 19, 2008. Normal trading volumes were expected to resume on Monday, January 5, 2009.
OIL: World oil prices fell by about 54 percent in 2008 as a sharp global economic slowdown weighed on energy demand in the second half of the year. However, in the first half, crude futures rocketed to record highs of above 147 a barrel in July on fears of supply disruptions. Towards the end of 2008, prices slumped to just above 33 dollars - the lowest in four and a half years.
Prices rallied this week as the Israeli-Hamas conflict in Gaza stoked tensions in the key oil-producing Middle East. Analysts said the market had also been supported by evidence that the Opec oil producers' cartel was cutting output in line with an announcement earlier this month. Previous Opec cuts have often been met with partial compliance.
Crude oil began 2008 by vaulting above 100 dollars for the first time as traders worried about violence in oil exporter Nigeria and supply problems in the key US energy market. Continued geopolitical tensions then saw oil rocket above 120, 130 and 140 dollars on their way to setting all-time highs by mid-year.
By Friday on the New York Mercantile Exchange (NYMEX), light sweet crude for delivery in February jumped to 46.05 dollars, which compared with 36.91 dollars per barrel on December 19. On London's InterContinental Exchange (ICE), Brent North Sea crude for February increased to 46.89 dollars, from 44.67.
PRECIOUS METALS: Gold and silver edged higher in 2008, while palladium and platinum lost between 40-50 percent of their value, pulled lower by recession concerns. Gold had soared to a historic peak of 1,032.70 dollars on March 17, 2008, as investors sought a safehaven against a backdrop of tumbling world stock markets, a falling dollar and record oil prices, dealers said. "Gold remains the big winner of 2008," said analyst Simon Denham at Capital Spreads in London.
Gold, which is used in jewellery, dentistry and electronics, also benefited from its status as a safe bet in times of economic and geopolitical turmoil. Stocks around the world were rocked in 2008 by the global financial crisis and international credit crunch. On the London Bullion Market on Friday, gold increased to 874.50 dollars an ounce at the late fixing from 835.75 dollars a week earlier.
Silver increased to 11.08 dollars an ounce from 10.61 dollars. On the London Platinum and Palladium Market, platinum gained to 926 dollars an ounce at the late fixing on Friday from 848 dollars on December 19. Palladium climbed to 185 dollars an ounce from 172 dollars.
BASE METALS: Base metals prices rebounded this week after traumatic losses last year. In 2008, aluminium shed 36 percent and copper erased 54 percent. Nickel and zinc sank by 55 percent and 49 percent respectively, while tin declined by 35 percent. The worst performer was lead, which lost 61 percent in value.
However, during the first half of 2008, aluminium, copper and tin scored historic highs on the back of supply concerns in key producer nations. But prices then plunged as base metals were rocked by the worst financial crisis since the Great Depression, with Europe, Japan and the United States sliding into a painful recession.
Most base metals were also hampered by rising inventories, high production levels and a massive withdrawal of speculative investors from commodities. Copper, which had struck an all-time high of 8,675 dollars per tonne on July 2, 2008, plummeted to 2,817 dollars on December 24 - which was last seen in October 2004. Zinc also hit a four-year trough in November.
Aluminium, which set a record high 3,380 dollars per tonne on July 11, dived to a five-year low of 1,430.50 dollars per tonne on December 18. Tin was another casualty, sliding in December to 9,700 dollars per tonne, which was last seen in November 2006. The metal had touched a historic high of 25,500 dollars in May 2008, supported by dwindling global supplies and production problems in Indonesia.
Lead, meanwhile, sank in December to 851 dollars per tonne, matching a level last seen in September 2005. By Friday, copper for delivery in three months jumped to 3,169 dollars a tonne on the London Metal Exchange from 2,870.25 on December 19.
-- Three-month aluminium rallied to 1,535 dollars a tonne from 1,490 dollars.
-- Three-month lead advanced to 1,080 dollars a tonne from 891 dollars.
-- Three-month zinc rose to 1,251 dollars a tonne from 1,105 dollars.
-- Three-month tin gained to 11,500 dollars a tonne from 10,415 dollars.
-- Three-month nickel increased to 12,875 dollars a tonne from 10,100 dollars.
COCOA: Cocoa futures fell this week but found support in 2008 from a tight global supplies. "The market at the moment is holding pretty well," said Sucden anlayst Stephanie Garner, who cited tight supplies in West Africa as a key supportive factor. London cocoa prices had hit a record high of 1,822 pounds per tonne on December 19. The previous day, New York prices stretched as high as 2,718 dollars a tonne - the highest since last September.
By Friday on Liffe, London's futures exchange, the price of cocoa for delivery in March dipped to 1,788 pounds a tonne from 1,800 pounds a week earlier. On the New York Board of Trade (NYBOT), the March cocoa contract decreased to 2,542 dollars a tonne from 2,661 dollars.
GRAINS AND SOYA: Grains and soya prices held steady but remained far below record highs touched last year. "2008 has been a year of chequered fortunes for the grains markets, with corn, wheat and soybean all hitting fresh all-time highs before dropping 50-65 percent from their peaks," said Barclays Capital analysts. In February 2008, wheat had rocketed to an historic peak of 13.495 dollars per bushel in Chicago thanks to tumbling inventories and keen global demand, traders said.
And in July, soya struck a record pinnacle of 16.52 dollars and maize (corn) leapt to an all-time high at 7.6775 dollars per bushel. By Friday on the Chicago Board of Trade, maize for delivery in March dipped to 4.04 dollars a bushel from 4.12 dollars the previous week. March-dated soyabean meal - used in animal feed - firmed to 9.81 dollars from 9.56 dollars. Wheat for March increased to 6.03 dollars a bushel from 5.99 dollars.
COFFEE: Coffee prices dipped in London this week in thin trade as recession fears also rattled traders. By Friday on Liffe, Robusta for delivery in March fell to 1,589 dollars a tonne from 1,818 dollars a week earlier. On the NYBOT, Arabica for March stood at 110.70 US cents a pound, unchanged from December 19.
SUGAR: Sugar prices rose this week, aided by rebounding oil prices. Sugar is used in the production of ethanol, a cheaper alternative to motor fuel which is refined from crude oil. When crude futures rise, demand increases for ethanol.
By Friday on Liffe, the price of a tonne of white sugar for delivery in March rose to 327 pounds from 313.20 pounds on December 19. On NYBOT, the price of unrefined sugar for March gained to 11.88 US cents per pound from 11.18 cents.
RUBBER: Malaysian rubber prices gained ground, supported by poor weather in producing countries and measures to boost prices that have been hit by the economic slowdown. On Friday, the Malaysian Rubber Board's benchmark SMR20 rose to 130.70 US cents per kilo, from 124.45 US cents per kilo.
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