Commodity markets mostly fell last week, taking a hit as the dollar soared following market-busting growth data in the United States, which is the world's biggest economy. US gross domestic product rose 5.0 percent in the third quarter, official data showed Tuesday. That was up from the prior estimate of 3.9 percent and outstripped expectations of 4.3 percent.
The dramatic news sent the euro plunging to $1.2165, its lowest level since August 2012. The stronger greenback makes dollar-priced commodities more expensive for buyers using weaker currencies, which in turn weighs on demand. "Commodity demand would improve with a stronger US economy - but the US GDP surprise reflected in a stronger dollar, meaning most commodities which are denominated in US dollars closed lower," said CMC Markets analyst Jasper Lawler. Trading was subdued in holiday-shortened deals, with many market participants away for the Christmas and New Year festive break.
OIL: Prices rebounded slightly from five-year lows hit the previous week, but remain plagued by plentiful supplies and weak demand. "Oil has had a relatively positive week, largely remaining above the $60-per-barrel level that has been its support recently," Spreadex analyst Connor Campbell told AFP. "However, this fact says it all; that Brent crude oil has been reduced to finding positivity in not slipping further than its five-year low, captures the depths the commodity has sunk to as 2014 comes to a close."
Oil faced a rollercoaster ride in 2014, soaring to nine-month peaks in June after the start of a bloody insurgency by jihadists in Iraq and Syria, which rattled supply worries in the crude-rich Middle East. European benchmark Brent had rocketed to $115.71 per barrel and New York's light sweet crude leapt to a similar peak at $107.73.
The market has since slumped about 50 percent on mounting global supplies and weak demand, thanks partly to increased US shale production and lacklustre global economic growth. Losses accelerated in November as the Opec cartel opted to maintain its oil output ceiling in an oversupplied market, with many analysts interpreting the move as an attack on high-cost US shale producers.
Just last week, Brent tumbled to $58.50 per barrel on December 16, touching a trough last seen in May 2009. WTI hit a similar low of $53.60 the same day. And on Tuesday, Opec kingpin Saudi Arabia's powerful oil minister Ali al-Naimi declared that the cartel would not cut production - even if the market drops to $20 per barrel. By Wednesday on London's Intercontinental Exchange, Brent North Sea crude for delivery in February declined to $60.23 per barrel compared with $60.69 last Friday. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for January edged down to $55.89 per barrel from $56.23. Metals under pressure
PRECIOUS METALS: Prices of gold and silver fell this week, in line with the strong dollar, at the end of a mixed year for both precious metals. The dollar has rallied since the Federal Reserve signalled it may raise US interest rates before other leading central banks in mid-2015. "The Federal Reserve provided reassurances to investors ... that it will begin raising US interest rates during the upcoming year, with this encouraging a stronger dollar and underpinning a longer-term bearish view on metals," said FXTM analyst Jameel Ahmad.
By late Wednesday on the London Bullion Market, the price of gold fell to $1,177 an ounce from $1,195.50 last Friday. Silver slid to $15.77 an ounce from $15.86. On the London Platinum and Palladium Market, platinum firmed to $1,199 an ounce, from $1,197. Palladium increased to $809 an ounce from $795.
BASE METALS: Base or industrial metals mainly fell as they approached the end of a gloomy 2014, weighed down by weak global growth and an economic slowdown in key consumer China. Prices won a brief reprieve in November following a surprise interest rate hike from China's central bank.
"This weakness in the global economy has also translated into the rest of the industrial sector as copper, platinum and silver prices have also remained weak, also on the back of slower than expected global growth," said CMC Markets analyst Michel Hewson. Copper is on course to end the year with an annual loss of 13 percent, while lead and tin have lost about 16 percent and 17 percent respectively.
By Wednesday on the London Metal Exchange, copper for delivery in three months dropped to $6,342.50 a tonne from $6,368 last Friday. Three-month aluminium declined to $1,874.50 a tonne from $1,911.50. Three-month lead slid to $1,858.50 a tonne from $1,885.75. Three-month tin sank to $18,365 a tonne from $19,386. Three-month nickel rose to $15,482 a tonne from $15,426. Three-month zinc increased to $2,175 a tonne from $2,162.50.
COCOA: Cocoa steadied after having soared in recent months on concern that the Ebola virus outbreak would hurt output in West Africa, home to 70 percent of global production. Back in September, London prices surged to £2,187 per tonne, the highest level since spring 2011. However, the cocoa market has since tailed off as Ebola did not impact Ghana or Ivory Coast, the two biggest producers of the commodity that is mostly used to make chocolate.
By Wednesday on Liffe, London's futures exchange, cocoa for delivery in March rose to £1,996 a tonne from £1,986 on Friday of the previous week. On the ICE Futures US exchange, cocoa for March eased to $2,978 a tonne from $2,981. Sugar market pauses.
SUGAR: Sugar diverged as dealers paused for breath after striking five-year lows the previous week on the back of abundant supplies. However, the market could shift into gains next year on the prospect of a production deficit, according to analysts.
By Wednesday on Liffe, the price of a tonne of white sugar for delivery in March rose to $391.90 from $391.50 last Friday. On ICE Futures US, the price of unrefined sugar for March fell to 14.81 US cents a pound from 15.34 US cents.
COFFEE: Coffee futures sank on the back of rainy weather and favourable growing conditions in key producer Brazil. "Futures markets were a little lower on reports of more good rains in coffee (producing) areas of Brazil," said Price Futures Group analyst Jack Scoville.
Overall, however, the market has rallied in 2014 as supplies were hit by a drought in Brazil earlier this year. Arabica has gained about 50 percent and Robusta around 16 percent. By Wednesday on ICE Futures US, Arabica for delivery in March dropped to 171.85 US cents a pound from 175.55 cents last Friday.
On Liffe, Robusta for March slid to $1,893 a tonne from $1,955.
RUBBER: Prices weakened further on the back of disappointing demand, dealers said. The market was expected to remain weak in 2015, hit by rising supplies, bearish demand and faltering global economic growth. Kuala Lumpur rubber prices have sunk by 31 percent so far this year. The Malaysian Rubber Board's benchmark SMR20 on Wednesday fell to 146.50 US cents a kilo from 148.10 US cents the previous week.
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