Commodity prices mainly sank this week as the dollar soared on strong US payrolls data, while many markets were also weighed down by abundant supplies and weak demand, dealers said. Brent oil tumbled Friday to two-year troughs, gold carved out the lowest level so far this year, and cocoa slid on profit-taking from recent 3.5-year highs that were forged on output fears linked to Africa's Ebola outbreak.
"Commodity markets remain on the defensive with rising supply in many key commodities continuing to apply near-term downside pressure to prices," said Saxo Bank analyst Ole Hansen. "That, not least, is also due to current concerns about a slowdown in global growth and its potential negative impact on demand at a time where the dollar continues to go from strength to strength."
The European single currency dived on Friday to $1.2501, its lowest level since late August 2012. A stronger greenback makes dollar-priced commodities more expensive for buyers using weaker currencies, which tends to dent demand and push prices lower.
OIL: Brent oil plunged Friday in reaction to the strong dollar, with sentiment also rocked this week after key crude exporter Saudi Arabia cut its prices. The dollar rallied on news that a strong 248,000 net new positions were created in the United States in September, beating analyst expectations of 210,000 jobs after a disappointing 142,000 in August.
The US unemployment rate meanwhile fell to 5.9 percent, the lowest level in six years. Oil also slid Thursday after Saudi Arabia, the biggest producer in the Opec oil cartel, announced lower prices for the fourth straight month in a bid to hold onto market share.
Brent slumped Friday to $91.48 a barrel, which was last witnessed in June 2012. New York crude had tumbled Thursday to $88.18 - a level last seen in April 2013. The market was hit again by concerns about a glut of global supplies, which have overshadowed ongoing geopolitical jitters in key oil-producing regions.
"Despite unresolved geopolitical tensions in Russia, Iraq and Syria, Brent prices have steadily declined over the last two months, as the combination of strong North American production growth, weak global demand growth and lower Opec disruptions led to a build in petroleum inventories," wrote Goldman Sachs analysts. In the third quarter of 2014, both Brent and New York oil prices have shed approximately 15 percent of their value, hit by the weak energy demand outlook.
"Global concern over declining economic growth and waning demand combined with a robust supply continue to weigh on the global oil market," added Inenco analyst Dorian Lucas. By Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in November tumbled to $91.88 a barrel compared with $96.91 one week earlier. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for November recoiled to $89.67 a barrel, from $93.16 a week earlier. Gold dips under $1,200.
PRECIOUS METALS: Gold fell below $1,200 per ounce for the first time this year, as robust US payrolls also dimmed haven investment demand, dealers said. "The stronger-than-expected economic data saw a renewed appetite for risk among investors, with gold prices selling off sharply today as investors pulled out of the perceived safe haven in search of higher yielding assets," said Sucden analyst Kash Kamal.
The glamorous metal slid Friday to $1,191.46, a level last seen on December 31, 2013. Sister metal silver hit $16.72, the lowest point for four and a half years. "The strong dollar and waning safe-haven demand weighed on all precious metals prices and led to investor selling," added analysts at British-based research consultancy Capital Economics.
By late Friday on the London Bullion Market, the price of gold had dropped to $1,195 an ounce from $1,213.75 a week earlier. Silver decreased to $16.97 an ounce from $17.54. On the London Platinum and Palladium Market, platinum reversed to $1,249 an ounce from $1,304. Palladium eased to $763 an ounce from $802.
BASE METALS: Base or industrial metal prices fell, hurt by the stronger dollar and downbeat data from key consumer China. "Data from China proved slightly disappointing," said Triland Metals analysts.
Chinese manufacturing growth stalled in September, data showed Wednesday, as a sluggish property market complicates leaders' attempts to address a slowdown in the world's second-largest economy. The official purchasing managers index (PMI) came in at 51.1 in September, unchanged from the previous month, the National Bureau of Statistics said in a statement.
While it was above the 50-point mark that separates growth and contraction, it comes a day after HSBC's own PMI missed forecasts. By Friday on the London Metal Exchange, copper for delivery in three months fell to $6,625 a tonne from $6,730 a week earlier.
-- Three-month aluminium dropped to $1,912 a tonne from $1,960.75.
-- Three-month lead eased to $2,082.25 a tonne from $2,083.75.
-- Three-month tin dipped to $20,415 a tonne from $20,784.
-- Three-month nickel slid to $16,352 a tonne from $17,372.
-- Three-month zinc decreased to $2,256 a tonne from $2,282.50.
COCOA: Prices slid from recent peaks as the Ebola outbreak showed no signs of spreading into key cocoa-producing nations in West Africa, which is home to most of the world's production. "The outbreak of the Ebola virus in West Africa remains the main support in the cocoa market, but it seems like aid workers are finally getting some control of the outbreak and there are no signs that the virus is spreading to other countries in the region," said Price Futures Group analyst Jack Scoville.
Cocoa had soared the previous week to 3.5-year highs on fears the Ebola outbreak could reach Ghana and Ivory Cost, the two biggest producers of the commodity used to make chocolate. The market had rallied to £2,187 per tonne in London and $3,399 per tonne in New York. Ghana and Ivory Coast account for 60 percent of the world's cocoa, while West Africa produces 72 percent of global cocoa output. "The virus has not been reported in production areas," added Scoville on Friday.
"Overall production conditions remain good in West Africa, with good rains being reported. It still appears likely that the region can produce a big crop." By far the most deadly epidemic of Ebola on record has spread into five west African countries since the start of the year, infecting more than 7,000 people and killing about half of them.
By Friday on Liffe, London's futures exchange, cocoa for delivery in December fell to £2,009 a tonne from £2,151 a week earlier. On the ICE Futures US exchange, cocoa for December dropped to $3,101 a tonne from $3,356 a week earlier.
SUGAR: The sugar market declined in line with most commodities. "Price declines are likely driven by the broad-based commodity complex sell-off," said Goldman Sachs analysts. By Friday on Liffe, the price of a tonne of white sugar for delivery in December traded at $422.80 compared with $427.60 a week earlier. On ICE Futures US, the price of unrefined sugar for March dipped to 16.21 US cents a pound from 16.42 US cents a week earlier.
COFFEE: Coffee prices however staged a modest rebound amid persistent worries over the supply outlook in key producer Brazil. "There is still a lot of uncertainty about the size of the current Brazil crop, and even more uncertainty about the next crop," added analyst Scoville.
"Traders keep hearing of lower production potential after some premature flowering and as rains continue to stay away from Arabica production areas this week." By Friday on ICE Futures US, Arabica for delivery in December rallied to 209.45 US cents a pound from 181.60 cents a week earlier. On Liffe, Robusta for November rebounded to $2,065 a tonne from $1,946 a week earlier.
RUBBER: Kuala Lumpur rubber prices retreated due to lack of buying interest from China. The Malaysian Rubber Board's benchmark SMR20 stood at 141.85 US cents per kilo on Friday, down from 145.95 US cents the previous week.
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