Coffee boils over amid Indonesian woe
Coffee boils over amid Indonesian woe
LONDON (AFP): Coffee prices boiled over this week amid fresh fears of damage to crops in Indonesia, the world's top producer of robusta, which prompted large-scale buying by investment funds.
Heavy downpours also lashed central America, and while it is too early to assess the damage to arabica plantations in the region, some market watchers warn that the quality and size of the crop could be affected.
A scarcity of high-grade arabica could force coffee manufacturers to turn to robusta, a low-quality bean mainly ground into instant brews.
The arrival of the monsoon in Indonesia has failed to alleviate entirely damage caused to the robusta harvest by a recent drought.
And it is far from certain that bumper pickings in Vietnam expected this season will compensate for the lack of Indonesian supplies.
All these factors provoked a spurt in robusta prices in London, which shot up by more than 7.5 percent over the week. Arabica prices in New York also rallied sharply.
On another front, the meltdown in gold prices continued apace, with the price of the precious metal diving US$12 on technical trades and further central bank bullion sales.
And oil prices plunged to around $18 after the decision of the Organization of Petroleum Exporting Countries (OPEC) to raise output ceilings by 10 percent, shrugging off Iraq's decision to suspend petroleum exports.
Gold: meltdown. Gold prices quoted on the London Bullion Exchange fell below a 12-1/2-year low this week, under the weight of technical trades and fears of widespread central bank sales, provoked this time by Argentina.
Prices slumped to around $287 per ounce from 296 last week.
"The market increasingly feels that there is no support either in Europe or in Asia," said Ted Arnold, a precious metals analyst at Merrill Lynch investment bank.
He predicted that gold prices might fall as low as $280 per ounce before the speculative investment funds move back into the market.
The market has been weighed down by the specter of central bank gold sales. This week, Argentina rocked the market with a surprise announcement that it had sold 124 tons of gold.
Financial turmoil across southeast Asia and Japan has also hit demand for gold.
And a rise in the value of the U.S. dollar has further eroded demand, as highly speculative investment funds pump money into currency deals rather than the precious metals market.
Excess supply has been another negative factor for the market. Gold slumped below the symbolic 300-dollars mark last week, in the wake of widespread technical trading, prompting what analysts termed a market "revolution" that would knock prices lower in the long term.
Silver: float. Silver prices rose by about three cents to $5.33 per ounce in the light of technical trades.
Platinum and palladium: calm. The price of these two metals changed little this week, in the absence of market-moving news.
Palladium prices rose by one dollar to $383 per ounce and platinum prices remained unchanged at $206.50 per ounce.
In its latest report on the two metals, Standard Bank said that platinum was overvalued and palladium prices were solid.
Copper: tarnished. Copper continued to fall victim to financial turmoil across southeast Asia, which has soaked up vast quantities of the metal through rampant building projects and the electronics industry.
Three-month copper prices quoted on the London Metal Exchange (LME) fell by more than $50 to $1,842.5 per ton.
Aluminum: lighter. Aluminum prices fell amid lower demand in Asia as financial turmoil and faltering economic growth continued to afflict the region.
Three-month aluminum prices fell by $22 to about $1,588 per ton.
Nickel: low. Nickel prices fell to a three-and-a-half-year low at midweek, when fears of a sharp reduction in demand from southeast Asia severely dented market sentiment.
Three-month prices fell by $152 to about $6,127 per ton.
Tin: weak. Tin prices fell by $88 to $5,652 per ton after a slight rise in LME reserves.
Oil: gloom. Oil prices fell sharply in the wake of a decision the previous weekend by the Organization of Petroleum Exporting Countries (OPEC) to raise output ceilings.
In this gloomy environment, the oil market shrugged off Iraq's decision to suspend petroleum exports. The benchmark price of Brent North Sea crude for delivery in January fell by 72 cents to $18.04 per barrel.
Rubber: stuck. Rubber prices remained unchanged at 545 pounds per ton, amid extremely quiet trade.
The Lewis and Peat trading house said that supply was plentiful, but that key buyers such as Korea and Japan had been kept at bay by financial turmoil there.
Cocoa: calm. Cocoa prices advanced marginally, rising a dollar to $1,026 per ton, because of the fall of the pound, which made London cocoa contracts cheaper for foreign buyers.
The harvesting of the current crop in the world's number one producer, Ivory Coast, which could be slowed down by recent heavy rainfall, will determine the movement of prices in the next few weeks.
Coffee: boiling. Robusta coffee prices in London hit boiling point because of renewed fears of damage to Indonesian crops and downpours in central America which may affect the quantity and quality of coffee beans grown in the region.
The price of robusta beans on the London futures market gained $124 to 1,763 per ton.
Grains: weaker. The U.S. grains market weakened slightly, despite fresh demand from Egypt and Morocco, because of intensifying competition between U.S. and French wheat.
Sentiment was also undermined by rumored buying from China failing to materialize and a small sale of Argentine wheat to Sri Lanka, which slightly reduced the scope for U.S. exports to that country.
On the Chicago Board of Trade (CBoT), wheat prices lost one cent to $3.55 per bushel (27.2 kg -- for delivery in March).
Cotton: squeeze. The economic slowdown and financial turmoil in Asia have caused concern about future Asian demand for the fiber and the prospects for U.S. exports to the region.
The market still fears cancellation of some orders, as the massive U.S. cotton harvest continues to be reaped, despite downpours in the southern "Cotton Belt" of the United States, the world's biggest cotton producer.
Prices covered by the Cotton Outlook index fell sharply by $1.15 to 75.95 cents per pound.
Wool: cold. The British wool market was chilly, with prices on the Bradford market falling by nine pence to 390 pence per kg.
Australian prices covered by the Eastern index fell by four cents to 708 Australian cents per kg, as the continued decline of the Australian dollar prompted producers to hurriedly offload their wool.