Wheat prices fell over the last week despite a brief late surge on reports that drought-ravaged Russia plans to import the commodity, while oil futures extended losses on poor US economic data.
GRAINS AND SOYA: Wheat futures rallied on Thursday as a report said Russia was planning this year to return to the Soviet practice of importing millions of tonnes of grain to overcome a shortfall caused by a record drought.
For the 2010-2011 agricultural year, Russia could import at least five million tonnes of grain, a source close to the leadership of the ministry of agriculture told the Vedomosti daily. Until the current drought, which has destroyed one quarter of its crops, Russia was one of the world's top grain exporters. In the last year, it was the world's number three exporter of wheat.
Prime Minister Vladimir Putin has banned Russian grain exports in a bid to keep the Russian domestic market well supplied with grain and prevent sharp rises in prices. The move by such a key global player stung world wheat markets earlier this month, sending prices to two-year highs and sparking worries of a crisis in global food supplies.
Wheat soared to 8.68 dollars a bushel (about 25 kilogrammes) on August 6 - the highest level for 24 months. "There is much concern and media speculation about whether the recent events in Russia might lead to a sustained rise in agricultural and food prices," said Macquarie analyst Kona Haque. "The last time that the world suffered 'agflation' was as recently as 2007/08, when, similar to now, droughts in key wheat exporting areas led to a serious crop shortfall. "But the similarities end there, because what we are seeing currently is a world market that is much better buffered in terms of coping with regional deficits," she added. By Friday on the Chicago Board of Trade, wheat for delivery in December fell to 7.13 dollars a bushel from 7.34 dollars the previous week.
Maize for December rose to 4.29 dollars a bushel from 4.27 dollars. November-dated soyabean meal - used in animal feed - decreased to 10.04 dollars a bushel from 10.44 dollars.
OIL: World oil prices fell further this week, hammered by a raft of poor economic data which sparked questions about the strength of the recovery in leading energy consumer the United States. Despite a positive start to the week, oil was hit hard on Thursday when gloomy data showed the number of Americans filing new weekly claims for jobless benefits jumped unexpectedly to 500,000, the highest level in nine months.
The jobless figures marked the third straight week in which claims have risen, underscoring the threat posed by unemployment on the recovery from the worst US recession in decades. The mood was further dampened when the Federal Reserve of Philadelphia said manufacturing activity in the mid-Atlantic region has dropped during August.
"It was the disappointing US economic data, including poor US jobless claims and an unexpected negative figure in the US Philly Fed business index, which set the bearish tone," said Sucden analyst Myrto Sokou. "The energy market is looking out of power and out of breath," she said. "It remains a recent trend that oil prices are tracking the global equity markets, which are fairly weak with heavy losses across the board."
Sentiment had been dampened on Wednesday by news of a smaller-than-expected drop in American crude stockpiles. US crude reserves fell 800,000 barrels in the week ending August 13, less than forecast, official figures showed. Gasoline (petrol) inventories were flat, while analysts had predicted a drop of 500,000 barrels.
"Levels of oil inventories remain at high levels, showing an oversupplied market," Sokou added. By late Friday on the New York Mercantile Exchange, Texas light sweet crude for delivery in September sank to 73.81 dollars a barrel from 75.58 dollars the previous week.
On London's Intercontinental Exchange, Brent North Sea crude for October stood at 74.62 dollars compared with 75.28 dollars for the now-expired September contract.
PRECIOUS METALS: Gold prices reached seven-week highs, helped by the metal's safe-haven status in times of economic unease. Gold reached 1,237.50 dollars an ounce - the highest point since July 1 and close to its all-time high of 1,265 dollars reached on June 21.
"Gold pushed higher ... extending last week's gains on continued safe haven buying," said VTB Capital analyst Andrey Kryuchenkov. "We are approaching the traditionally busy period for jewellers in Asia ahead of India's autumn festivals. The trade side is (therefore also) likely to get more active in September."
By late Friday on the London Bullion Market, gold advanced to 1,223.50 dollars an ounce from 1,214.25 dollars a week earlier. Silver grew to 18.14 dollars an ounce from 18.06 dollars. On the London Platinum and Palladium Market, platinum fell to 1,512 dollars an ounce from 1,527 dollars. Palladium climbed to 478 dollars an ounce from 473 dollars.
BASE METALS: The prices of base or industrial metals softened late in the week following poor US economic data. "Prices generally were softer across the complex as weaker than expected US economic data jolted market confidence," said Barclays Capital analyst Nicholas Snowdon.
By late Friday on the London Metal Exchange, copper for delivery in three months rose to 7,243 dollars a tonne from 7,227 dollars. Three-month aluminium dropped to 2,038 dollars a tonne from 2,144 dollars. Three-month lead slipped to 2,055 dollars a tonne from 2,095 dollars. Three-month tin stood at 20,650 dollars a tonne, unchanged from a week earlier. Three-month zinc edged up to 2,058 dollars a tonne from 2,057 dollars. Three-month nickel dropped to 21,450 dollars a tonne from 21,500 dollars.
COFFEE: Coffee futures rallied close to 12-year highs on keen demand from speculators, traders said. Prices hit 181.50 US cents a pound in New York on Monday.
By Friday on the New York Board of Trade (NYBOT), Arabica for December stood at 180.90 US cents a pound compared with 177.35 cents for September, which had been the most traded contract the previous week. On Liffe - London's futures exchange - Robusta for delivery in November fell to 1,760 dollars a tonne from 1,774 dollars.
COCOA: Cocoa prices extended recent losses on rising stockpiles. "Recent reports of improving weather in West Africa have also been lending bearishness to the futures markets," said Macquarie analyst Kona Haque. By Friday On NYBOT, the December cocoa contract dipped to 2,878 dollars a tonne from 2,894 dollars a week earlier. On Liffe, cocoa for delivery in December dropped to 2,017 pounds a tonne from 2,043 pounds.
SUGAR: Sugar futures extended recent gains as Pakistan's devastating floods and Russia's drought hit production. "Prices have firmed up again on news of production downgrades in flood-hit Pakistan and in drought-hit Russia," said Macquarie analyst Kona Haque.
By Friday on NYBOT, the price of unrefined sugar for delivery in October increased to 20.01 US cents a pound from 18.96 cents a week earlier. On Liffe, the price of a tonne of white sugar for October rose to 577.60 pounds from 550.10 pounds.
RUBBER: Malaysian rubber prices bounced. The Malaysian Rubber Board's benchmark SMR20 contract rose to 311.80 US cents a kilo from 301.40 cents a week earlier.