Commodity prices move both ways on Cyprus strains, US data

Commodity prices were mixed last week as traders took their cue from events in embattled eurozone nation Cyprus as well as a batch of positive US economic data. Markets on both sides of the Atlantic were closing a day earlier than usual ahead of the Easter break. 

Cyprus banks on Thursday reopened under armed guard after a nearly two-week lockdown, but customers faced harsh curbs to stop them draining the island’s coffers after its eurozone bailout. Queues of dozens of people formed before the doors swung open at 1000 GMT for the first time since March 16, and there were tensions as a few branches opened late, with customers banging on the doors. 

World markets have been jittery over the crisis, which has seen capital controls imposed for the first time by a eurozone economy to prevent financial meltdown after the 10-billion-euro ($13-billion) EU-IMF rescue package. Under a deal agreed in Brussels on Monday, Cyprus must raise 5.8 billion euros to qualify for the full 10-billion-euro loan from the “troika” of the European Union, European Central Bank and International Monetary Fund. 

Depositors with more than 100,000 euros in the top two banks – Bank of Cyprus (BoC) and Laiki or ‘Popular Bank’ – face losing a large chunk of their money. There were concerns also among market watchers over the ongoing political deadlock in eurozone member Italy. And the week also saw upbeat US economic data, including figures on Thursday that showed US economic growth in the fourth quarter stronger than originally thought – at 0.4 percent. 

OIL: Crude prices rose solidly over the week, with New York oil hitting six-week highs, as well-received economic data from the United States, the world’s biggest economy, offset fears that Cyprus’ controversial bailout terms could be repeated should other indebted eurozone nations require financial rescues. 

A 5.7-percent gain in US durable goods orders in February, though mainly driven by aircraft orders, sustained a picture of steady growth in the United States, the world’s largest consumer of oil. Underpinning the data that was another monthly gain on the S&P/Case-Shiller index for home prices, which registered its best year-on-year gain, 8.1 percent in February, since mid-2006. 

Strategic Energy and Economic Research analyst Michael Lynch said the data helped the buying mood. “It is kind of a snowball effect, with people going from worrying about possibly a double-dip recession, to being convinced that the recovery in the US is on solid ground. This is going to mean stronger demand for oil,” he said. 

The Department of Energy on Wednesday said that US crude inventories rose by 3.3 million barrels last week, but that refined product stocks had fallen – indicating growing demand for gasoline. 

By Thursday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in May increased to $109.42 a barrel from $107.13 the previous Friday. On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for May jumped to $96.67 a barrel from $92.65. 

PRECIOUS METALS: Gold prices fell slightly as fears surrounding the Cyprus bailout eased. “Gold dropped below the $1,600 mark… with demand for the traditional safe haven diminishing as the front doors of Cypriot banks opened for the first time without the panic withdrawals many had predicted,” said CMC Markets trader Alex Young. 

By Thursday on the London Bullion Market, the price of gold fell to $1,598.25 an ounce from $1,607.75 the previous Friday. Silver dropped to $28.64 an ounce from $29.06. On the London Platinum and Palladium Market, platinum dipped to $1,576 an ounce from $1,580. 

Palladium grew to $770 an ounce from $754. 

BASE METALS: Base or industrial metal prices mostly declined. “The stronger dollar pressured the metals group, as did lingering concern over both the Cypriot situation and the Italian election stalemate,” said Edward Meir, analyst at financial services group INTL FCStone. A stronger US currency makes dollar-denominated commodities more expensive for holders of rival currencies, denting demand. By Thursday on the London Metal Exchange, copper for delivery in three months fell to $7,606 a tonne from $7,685 the previous Friday. 

—- Three-month aluminium dropped to $1,913 a tonne from $1,945. 

—- Three-month lead slipped to $2,115 a tonne from $2,186. 

—- Three-month tin rose to $23,150 a tonne from $22,850. 

—- Three-month nickel retreated to $16,690 a tonne from $17,085. 

—- Three-month zinc slid to $1,901 a tonne from $1,955. 

COCOA: Cocoa futures fell after recent gains fuelled by expectations of a supply deficit. By Thursday on Liffe, London’s futures exchange, cocoa for delivery in May dipped to £1,455 a tonne from £1,459 the previous Friday. On New York’s NYBOT-ICE exchange, cocoa for May dropped to $2,162 a tonne from $2,176. 

COFFEE: Prices diverged, with Robusta-quality coffee sliding to near two-month lows and the higher-quality Arabica rising. Reports from Robusta’s biggest producer, Vietnam, “that coffee shipments for March will be significantly higher have led” prices lower, said Toby Morris, an analyst at CMC Markets trading group. By Thursday on Liffe, Robusta for delivery in May slid to $2,044 a tonne from $2,157 the previous Friday. On NYBOT-ICE, Arabica for May climbed to 137.30 US cents a pound from 133.85 cents. 

SUGAR: Prices headed lower on the prospect of a supply surplus fuelled mostly by Brazil – the world’s largest sugar producer. “The sugar market continues to follow Brazilian production news closely, with the large crop there and the expectations for a sizeable global surplus keeping the bias pointed lower,” said specialist commodities magazine The Public Ledger. 

Broker Czarnikow has raised its world sugar surplus forecast for the 2012/13 season to 9.1 million tonnes from 7.8 million. By Thursday on Liffe, the price of a tonne of white sugar for delivery in May retreated to $505.50 from $529.70 the previous Friday. On NYBOT-ICE, the price of unrefined sugar for May slipped to 17.82 US cents a pound from 18.26 cents. 

Copyright Agence France-Presse, 2013

Muhammad Ramzan Rafique
Muhammad Ramzan Rafique

I am from a small town Chichawatni, Sahiwal, Punjab , Pakistan, studied from University of Agriculture Faisalabad, on my mission to explore world I am in Denmark these days..

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