Commodity prices diverged this week as traders reacted to supply and demand movements in key consumers the US and China, and assessed the outlook for the US Federal Reserve’s stimulus program.
The US Federal Open Market Committee (FOMC) on Wednesday kept its stimulus program unchanged, but gave a rosier-than-expected summary of the economy, fueling expectations it would soon start winding the measure down.
While the central bank’s decision to keep the US$85 billion-a-month scheme in place was widely expected, the upbeat outlook provided strong support for the US dollar. This made US dollar-priced commodities more expensive for holders of rival currencies, hurting demand and in turn putting downward pressure on prices.
OIL: New York crude fell owing to large stockpiles in the US, while Brent futures rose thanks to Libyan supply strains and strong manufacturing output in China, analysts said.
China’s manufacturing purchasing managers’ index (PMI) climbed to 51.4 last month from 51.1 in September, the National Bureau of Statistics said on Friday. The PMI reading was the highest since 53.3 in April last year. Anything above 50 indicates expansion, while a figure below signals contraction.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in December jumped to US$108.63 a barrel from US$106.62 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for December slipped to US$96.23 a barrel from US$97.54.
PRECIOUS METALS: Gold prices fell in the wake of the Fed meeting.
“Following publication of the statement after the FOMC meeting, the US dollar appreciated against the euro, thus weighing on precious metal prices,” Commerzbank analysts said. “Clearly, some market players expect the Federal Reserve to scale back its bond purchases in the near future.”
By late Friday on the London Bullion Market, the price of gold dropped to US$1,306.75 an ounce from US$1,347.50 a week earlier.
Silver fell to US$21.75 an ounce from US$22.35.
On the London Platinum and Palladium Market, platinum gained to US$1,453 an ounce from US$1,440.
Palladium edged up to US$737 an ounce from US$733.
BASE METALS: Industrial metals rose week-on-week thanks to strong Chinese manufacturing data published on Friday.
“The better-than-expected China official figure gives the metals market a boost on the first day of November,” said Richard Fu, director of Asian commodities trading at brokers Newedge.
By Friday on the London Metal Exchange, copper for delivery in three months rose to US$7,289.25 a tonne from US$7,134 a week earlier.
Three-month aluminum rose to US$1,871 a tonne from US$1,854.50; three-month lead increased to US$2,202.50 a tonne from US$2,170; and three-month tin grew to US$22,925 a tonne from US$22,820.
Three-month nickel advanced to US$14,668 a tonne from US$14,501, and three-month zinc climbed to US$1,960.75 a tonne from US$1,929.75.
COFFEE: Futures hit fresh multiyear lows on expectations of large harvests.
Arabica on Friday reached US$1.0485 a pound (0.45kg), the lowest level for nearly three-and-a-half years, while Robusta slumped to US$1,455 a tonne, a trough last reached more than four-and-a-half years ago.
Macquarie financial group analyst Kona Haque said “flowering for the new season Brazilian crop bodes very well for next year’s crop and Colombia’s coffee crop is progressing extremely well.”
By Friday on the ICE Futures US exchange in New York, Arabica for delivery in December had fallen to US$1.0505 a pound from US$1.106 a week earlier.
On LIFFE, London’s futures exchange, Robusta for January sank to US$1,457 a tonne from US$1,582 a week earlier.
SUGAR: Prices fell further after striking a one-year peak last month following a fire at a key terminal in top producer Brazil.
By Friday on the ICE Futures US exchange, the price of unrefined sugar for delivery in March dropped to US$0.1834 a pound from US$0.1889 a week earlier.
On LIFFE, the price of a tonne of white sugar for March — the week’s most traded contract — slipped to US$488 from US$501.50 for the December contract a week earlier.