Coffee markets come under pressure, soya prices surge
Coffee markets come under pressure, soya prices surge
LONDON (AFP): The coffee markets in London and New York came back to a boil this week as the main feature on the commodities markets, following the summer break, heated up by the prospect of a low harvest in Indonesia - in third place among coffee exporters.
Coffee plantations in Southeast Asia have been hit hard by drought. Experts said that if Indonesia does not get any rain by the end of the month, the big robusta producer will record a disastrous harvest.
The abundance of the 1997 arabica harvest in Brazil, the sector heavyweight, would find it hard to make up for a poor harvest in Indonesia, as robusta has the advantage of being less expensive for instant coffee manufacturers.
But Vietnam might help make up for the weakness of Indonesian exports thanks to an exceptional harvest. Elsewhere on the commodities markets, soya prices surged on the Chicago more
GOLD: Under pressure. The announcement this week of the sale of 31 tons of gold by Russia in August was perceived as "slightly negative" for the market, according to experts at British brokerage GNI.
That sale "adds to the concern about central bank sales from elsewhere", GNI said. Several central banks have recently gotten rid of part of their gold stocks, shifting to foreign currency reserves or other investments that are easier to use.
SILVER: Firm. The metal continued to enjoy operator confidence and the price remained firmly at around US$4.70 an ounce. One operator said the price had been sustained by bank buying.
Mexico, the world's leading silver producer, will turn out more than 100 million ounces next year, up 3 percent on this year, according to a Silver Institute report. It said the rise in Mexican output is explained by an increase in world demand, especially for the photo industry and jewelry.
COPPER; Weak. Copper prices remained enfeebled by the constant increase in stocks on the London Metal Exchange (LME) and relatively abundant supply.
The reference price (for three-month delivery) was stable by comparison with last week at US$2,160 a ton.
Chinese imports of copper, high in 1996, shows signs of a slowdown this year, and various sources say China is expected to buy 100,000 to 150,000 tons this year against 250,000 last year.
LEAD: Firm. Lead prices were firm, rising by $10 to $650 a ton. But the increase in lead reserves on the LME made price prospects uncertain.
ALUMINUM: quiet. Prices slipped a week after LME intervention to prevent excessive price changes. The reference price (three- month deliver) fell by $10 to $1.620 a ton. But according to GNI, the possibility of a price rise cannot be ruled out.
Last week, the market managers intervened to calm trading down following a surge of spot prices, by limiting the possibility of cost fluctuations to borrow the metal overnight in connection with technical operations.
NICKEL: hard. The price of nickel, used in special steels, rose by $40 this week to 6,700 a ton as Russian producer Norilsk continues to run into technical problems, which will probably force a cut in its exports.
TIN: quiet. There was no news to give this metal a direction, as the price rose by $40 to 5,460 per ton.
OIL: Calm. Crude oil prices were little changed on the week, staying at around $18.3 a barrel for North Seat Brent.
The announcement of a decline in U.S. reserves of gasoline (petrol) and crude oil had a tendency to firm prices. But experts at Goldman Sachs say prices might decline in the coming weeks due to a drop in gasoline consumption resulting from seasonal factors.
RUBBER: Firm. The British rubber index remained firm, up five pounds to 595 pounds per ton, while the market continued to watch the monetary turbulence in Southeast Asia, the world's biggest rubber producing area.
A Lewis and Peat operator said Malaysian producers are now reluctant to sell their rubber, priced in ringgit, because of the losses resulting from devaluation of the national currency. At the same time, western tire makers are tempted to buy latex on local markets in Southeast Asia, since it has become very cheap for them.
COCOA: Quiet. Prices fluctuated little over the week, ending slightly higher, even though the market continues to worry about the effects of El Nino on producing regions, in west Africa and Indonesia.
But experts say it is still too early to determine whether El Nino will have a negative influence on the harvest in west Africa, which represents two-thirds of world output.
If rain stays absent in the coming weeks, the harvest in Indonesia, the world's leading robusta producer, could be very low, experts say. Earlier in the year, the plantations were damaged by water and wind.
At the same time, brokers are worried about El Nino's possible effects on Central American harvests.
The prospect of a halt to coffee exports from the Brazilian port of Santos, the country's main export point, also contributed to upward price pressure. The port staff might strike on September 9, according to GNI.
TEA: drop. Demand declined on the London auction market, pushing prices lower. Medium-grade team traded at around 145 pence per kilo, against 152.5 the previous week.
SUGAR: Passive. The announcement of a marked dip in exports from Thailand, a leading world seller of cane sugar, did not surprise the market.
The country is expected this year to sell only 4.16 million tons against the initial forecast of almost 4.5 million, GNI says. But the market did not move on the news, nor even on the announcement of floods damaging the cane crop in Pakistan. The price in London stood at $325 a ton, the same as last week.