Commodities/Markets

Sydney, Feb 25, 2008 (ABN Newswire) - Copper and gold eased, oil rose and some agriculturals were firmer after last week's big upward surge in commodity prices.

But the overall tone Friday was an easing in the upward pressure on commodity prices as financial investors took some profits.

Copper fell from the highest price since it peaked in May 2006 after world stocks reversed their recent sharp decline and rose on Friday.

That was enough to choke the stocks-driven rally in the metal..

Stockpiles monitored by the London Metal Exchange rose Friday for the first time in February, jumping 4.6% from Thursday's lower level to 141,600 tonnes.

That was after last week's 45% rise in stocks overseen by the Shanghai Futures Exchange to 45,188 tons this week.

That was believed to be a movement of stocks from London and the US to China where snowstorms and transport and production problems have seen a downturn in the amount of copper (and other metals and products) being produced.

Still copper finished the week up 7.5% and 25% for the year so far on the back of that 31% drop in LAME stocks.

Just where the price now goes is another thing: another rise in LME stocks will add to selling pressure on financial investors now active in every commodity market after the downturn in fixed interest and shares which have cut trading profits.

Comex copper futures for May delivery fell 1.9 USc to $US.803 a pound in New York. (The price reached a record $4.04 on May 11, 2006).

China's worst snowstorms in 50 years have hit production of all metals: aluminum firmed last week for example.

And output at Jinx Copper Co. and Tangling Nonferrous Metal Group, China's two largest copper refiners, has fallen as in the aftermath of the storms power was rationed and supplies of metal and concentrates couldn't be moved because of rail outages.

Copper hit $US.8545 a pound Thursday, the highest for a most-active contract since May 30, 2006.

LME three month copper fell $US to $US,330 a tonne ($3.78 a pound).

Crude oil rose after Turkish soldiers again moved into northern Iraq late last week.

An estimated 10,000 Turkish troops and equipment moved across the border against Kurdish militants after two months of air strikes

Crude oil for April delivery rose 58 USc in New York to settle at $US98.81 a barrel on Nymex.



The contract fell as much as $US1.07 and rose as much as $US1.14 in a day of swinging trading. Futures were up 3.5% last week. Oil prices are 62% above where they were a year ago.

Prices eased from touching a record $US101.32 a barrel midweek.

In London April Brent crude rose 77c to end at $US97.01 a barrel.

Like copper, oil is seeing sentiment change because of worries about the US and Chinese economies, while financial investors are trying to drive prices higher and take advantage of events like the Turkish move on Iraq to do so.

Deutsche Bank said in a research note last week that: "With oil demand growth risks skewed to the downside in the US, we believe there is a growing risk that oil prices are now entering overbought territory."

So far in 2008, oil has averaged $US93.02 a barrel, up nearly a third on the average in 2007 of $US72.30.

Gold eased Friday from record levels as the upward push in commodities slowed.

Gold hit an all time high of $US958.40 an ounce on Thursday but then eased.

Friday the price fell with April futures off $US1.40 an ounce to $US947.80 an ounce.

But the metal was still up 4.6% last week, the biggest rise since last November.

The price is up 13% so far this year.

March silver futures for March rose 8.5 USc Friday to $US18.035 an ounce. The metal is up 21% this year.

Coffee prices finished last week at 10-year highs on higher demand for beans from Brazil, the world's biggest producer, and falling consumer stocks in the US and Europe.

The commodity is now up 18% so far in 2008 after prices firmed 3.4 USc on Friday to $US1.624 a pound in New York. The price hit a 10 year high of $US1.6345 a pound during trading on Friday.

Brazilian exports have risen, but stocks in the US and Europe have fallen by around 3% so far this year.

Supplies are also tightening because the civil unrest in Kenya, Africa's fifth-biggest coffee exporter, is preventing shipments. That has also hit wholesale tea prices, driving them higher.

Wall Street rallied in the final 30 minutes of trading early Saturday, our time, helping the market post its second straight weekly gain.

That was after reports emerged of a possible rescue for bond insurer Ambac Financial Group this week with a $US3 billion capital injection said to be under negotiation.

The Standard & Poor's 500 Index climbed 10.58 points to 1,353.11, ending the week up 0.2%. The Dow average added 96.72 to 12,381.02; and Nasdaq rose 3.57 to 2,303.35.



The late rally reversed an earlier fall on forecasts US financial stocks will suffer poor earnings this year because of the slowing economy, slumping housing sector and continuing credit crunch.

US Federal Reserve Bank of Dallas President Richard Fisher said Friday the US will probably see slower economic growth rather than a deeper slump.

He said that the most likely scenario is that the U.S. will avoid a prolonged period of negative economic growth..

Europe's Dow Jones Stoxx 600 Index fell 0.8% after RWE, Germany's second-largest utility, reported its first loss since 2000.

European stocks fell Friday, cutting their second straight weekly advance.

The Dow Stoxx 600 rose 0.8% over the week but is still down 12 % this year.

Stock indexes dropped in all 18 markets in western Europe except Greece and Austria. Germany's DAX lost 1.4%, while France's CAC 40 slipped 0.7% and London's FTSE 100 eased 0.7% Friday.

The Footsie was up 1.7% last week. The Stoxx 50 fell 0.6%, while the Euro Stoxx 50, a measure for the euro region, fell 1.1%.

The MSCI Asia Pacific Index lost 0.8% on Friday and for the seventh week in eight. It's now down 9% so far this year.

The Nikkei fell 1.4% to 13,500.46 on Friday. It was the seventh weekly loss this year.

In Australia market finished the week in negative territory, with continuing fears of slowing US growth dragging the bourse lower.

The ASX 200 index fell 23.5 points lower to 5559.9, while the All Ordinaries index fell 18.5 points, to 5644.5.



The ASX 200 was off around 0.8% over the week, and the All Ordinaries was down 0.6%, thanks mainly to scepticism about the banks caused by news the ANZ and St George had bad debt problems.

The National Australia Bank lost 96c to $28.59 on Friday, Commonwealth Bank 86c to $42.59, Westpac 58c to $22.47, but the ANZ had a late rally and added 36c to $22.36.

Energy was mixed with the the price of crude oil falling back under $US100 a barrel. Woodside rose 5c to $55, Oil Search 2c to $4.45 but again Santos fell 45c to $12.60 as investors indicated their unhappiness with a poor 2007 profit and outlook.

Caltex Australia lost $1.78, or 10.79%, to $14.72 after the company forecast weaker refiner margins in 2008 and indicated earnings could be lower as well..

The company Friday lifted 2007 net profit 3% to $444 million.

Retailers were mixed with David Jones rising 7c to $4.17, Harvey Norman 30c to $4.70. But Woolworths fell 49c to $27.81.

Wesfarmers, owner of retailer Coles though was sharply higher because of a solid interim profit. It added $2.41 to $37.91 after lifting first-half profit by 53.3 per cent to a record $601 million.

Billabong International rose 56c to $12.40 after saying it was on track for full-year guidance despite a 2% dip in net profit to $88.7 million. It like so many companies had returned cut by the stronger Aussie dollar.

BHP Billiton adding 73c to $39.73 and rival Rio Tinto rose $1.92 to close at $135.60.

Full-year profit fell for lateritic nickel miner, Minara Resources but it gained 48c to $6.08 after forecasting strong nickel prices on robust demand from China for 2008.

Goldminers Newcrest lost 74c to $35.92 , Newmont 12c to $5.45 and Lihir Gold 2c to $3.88.

Newmont and Lihir produced 2007 earnings Friday which convinced investors, but not by much.

Both are finding costs rising.


 

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