Global commodity prices dived last week, in line with world stock markets, on concerns over the US Federal Reserve ending its multi-billion dollar economic stimulus measures, as well as owing to poor Chinese manufacturing data, analysts said. "The Fed has been the common denominator behind the moves across the whole of financial markets this week with commodities taking the brunt of the sell-off," said Fawad Razaqzada, analyst at traders GFT Markets.
"This is due to the fact they are all priced in US dollars which has been a star performer after (US central bank chairman Ben) Bernanke signalled the Fed's intention to withdraw its support by mid next year - a lot sooner than was apparently priced in."
OIL: Crude oil prices tumbled, with Brent North Sea crude suffering its biggest drop since early November - losing almost four dollars a barrel on Thursday.
New York's main contract ended down $2.84 the same day, while prices fell further on Friday. The oil market had on Thursday joined a global sell-off in markets in response to Bernanke's comments that the Fed could begin to wind down its $85 billion-a-month bond purchases if the economy continues to improve.
"With the case of crude oil, the move (downward) has been exacerbated due to on-going demand concerns and the fact supply is, and has been, rising in North America. The price of oil, therefore, could fall a lot further over the coming weeks and months," said analyst Razaqzada. "That's assuming there won't be any major supply shocks, which is always a possibility given the situation in Syria is deteriorating and that it could easily spread to other countries in the Middle East region."
Crude futures were hit additionally this week by poor manufacturing data from China - a key global economic driver and the world's top energy consumer. HSBC's preliminary purchasing managers' index (PMI) hit 48.3 in June, worse than May's final reading of 49.2 and its lowest since September. A reading below 50 indicates contraction, while anything above signals expansion. The data follows another batch of weak indicators in May that fuel concerns over the financial strength of China, the world's second-biggest economy.
"There is no substantive factor to support oil prices at this moment," said Victor Shum, managing director at research body IHS Purvin and Gertz in Singapore. "Oil futures will continue to move downwards in sync with equity markets after the US Fed announcement and poor Chinese manufacturing data," he told AFP on Friday.
By Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in August plunged to $100.19 a barrel from $105.93 a week earlier for the expired July contract. On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for August stood at $93.24 a barrel compared with $97.63 for the July contract a week earlier.
PRECIOUS METALS: Gold and silver prices slumped close to three-year low points after the Fed signalled that it would wind down its massive stimulus programme this year. Gold on Friday hit $1,269.45 an ounce - the lowest level since mid-September 2010. "Gold prices tumbled... with no large physical buyers or investors in sight," said Andrey Kryuchenkov, analyst at Russian financial group VTB Capital.
The precious metal had been hit by a rising dollar, making dollar-priced gold more expensive for buyers using rival currencies, thereby weighing on demand. Gold fell also on receding inflationary concerns, with many investors arguing that QE stimulus fuels price hikes. "The mood on the gold and silver markets yesterday was one of panic," Commerzbank analysts said in a research note on Friday. "On the basis of the closing price, gold lost 4.9 percent and silver 7.9 percent." By late Friday on the London Bullion Market, the price of gold retreated to $1,295.25 an ounce from $1,391.25 a week earlier. Silver dropped to $19.87 an ounce from $21.69. On the London Platinum and Palladium Market, platinum fell to $1,395 an ounce from $1,448. Palladium decreased to $672 an ounce from $728.
BASE METALS: Base or industrial metal prices dived in line with the precious complex. "The Fed's hints that it would soon taper the ongoing quantitative easing sent the dollar rallying. As a result, most dollar-denominated commodities suffered," said Kryuchenkov. By Friday on the London Metal Exchange, copper for delivery in three months sank to $6,810 a tonne from $7,089 a week earlier.
--- Three-month aluminium dropped to $1,795 a tonne from $1,858.
--- Three-month lead slid to $2,026 a tonne from $2,110.
--- Three-month tin decreased to $19,605 a tonne from $20,240.
--- Three-month nickel declined to $13,835 a tonne from $14,318.
--- Three-month zinc eased to $1,849 a tonne from $1,858.
COCOA: Cocoa futures slid to two-month lows, hit by the Fed and plentiful supplies of the commodity. "The main bearish influence (on prices) remains larger than expected output in West Africa," said commodities analysis publication The Public Ledger. "Ivorian port arrivals are even moving ahead of last year's total at this time and the latest weekly deliveries have remained strong."
By Friday on Liffe, London's futures exchange, cocoa for delivery in September fell to £1,429 a tonne from £1,510 a week earlier. On New York's NYBOT-ICE exchange, cocoa for September dropped to $2,161 a tonne from $2,301.
COFFEE: Arabica prices struck four-year low points after shedding 5.0 percent of their value on Thursday, as US stimulus worries added to large Brazilian coffee supplies. By Friday on NYBOT-ICE, Arabica for delivery in September tumbled to 119.75 US cents a pound from 125.65 cents a week earlier. On Liffe, Robusta for September dropped to $1,737 a tonne from $1,764.
SUGAR: Futures diverged, with price support coming from worries over tight Brazilian supply. By Friday on NYBOT-ICE, the price of unrefined sugar for delivery in October rose to 16.77 US cents a pound from 16.59 cents a week earlier. On Liffe, the price of a tonne of white sugar for October dropped to $474.1 from $474.3.
GRAINS AND SOYA: Prices were mixed ahead of key US stockpiles data due next week. By Friday on the Chicago Board of Trade, July-dated soyabean meal - used in animal feed - fell to $14.97 a bushel from $15.16 a week earlier. Maize for delivery in July grew to $6.69 a bushel from $6.55. Wheat for July climbed to $7.00 a bushel from $6.80.
RUBBER: Prices fell against a backdrop of high rubber inventories. The Malaysian Rubber Board's benchmark SMR20 dropped to 224.85 US cents a kilo from 230.35 cents a week earlier.