Palm oil bubbles up on Asian markets
Palm oil bubbles up on Asian markets
LONDON (AFP): The palm oil market came to a boil last week, as drought across South East Asia, where two thirds of world supplies are produced, raised market fears over next year's harvest.
Dealers on the Kuala Lumpur market in Malaysia, the hotbed of palm oil trades, and their counterparts in Rotterdam had hitherto counted on a plentiful harvest next year.
However, the palms have been threatened by drought in Malaysia and Indonesia.
Meanwhile, palm oil has enjoyed fresh demand from countries such as India and Pakistan, in the face of sharp losses in regional currencies such as the Malaysian ringgit and the Indonesian rupiah.
Other vegetable oil prices have risen in line with palm oil, notably soya prices which have soared in the light of dwindling stocks held in the United States.
In contrast, gold prices fell after the market was rocked by rumors of widespread sales on the part of central banks.
Gold: Melting. Rumors of gold sales by central banks have come back to haunt the market, sending prices lower this week.
A report by Gold Fields Mineral Services (GFMS) highlighted the sale of large quantities of gold by central banks in the first half of 1997.
GNI trading house said that the banks concerned were "probably of European origin."
European banks denied that they had recently off-loaded stocks of gold, but GNI noted that such comment "is nearly always a precursor to a major announcement."
Prices fell to US$319 per ounce before bouncing back to $321, down one dollar over the week.
Analysts predicted that prices would remain strong in the face of a seasonal upturn in demand from jewelers in the pre-Christmas season.
Silver: Down and up. Silver prices fell slightly in the wake of technical trades. Prices dipped to 4.63 dollars per ounce but then finished up five cents at 4.75 dollars an ounce.
Prices were buoyed by a sustained fall of stocks held in warehouses on the New York market. But GNI warned that the apparent fall in stocks might simply be a reflection of reserves being switched from the U.S. to London warehouses, as speculators squeeze the market.
Copper: Rise. Copper prices quoted on the London Metal Exchange (LME) rose by $20 to $2,130 per to on the wings of technical trades, dealers said.
An analyst at Rudolf Wolff trading house, William Adams, said that three-month prices had enjoyed "a technical correction after a series of losses."
However, the analyst said that the fundamentals of the copper market remained weak in the face of excess supply and a rapid build-up of stocks held in LME warehouses.
At BZW investment bank, Alan Richards predicted that copper prices would rise in 1998, as strong demand in Europe and the United States would counter a loss of imports into South East Asia, which has been hit by economic turmoil.
Aluminum: Hard. Aluminum prices strengthened by about $15 to $1, 635 per ton, under the influence of strong demand.
Canadian producer Alcan predicted that Western aluminum output would grow to $16.75 million in 1998, from $16.09 million in 1997. Nonetheless, the market would show a deficit of between 370,000 and 275,000 tons.
Nickel: Slide. Nickel prices fell by 10 dollars to 6,520 dollars per ton.
The French producer, Eramet, said that consumption of the metal, which is widely used in the production of stainless steel, rose by 13 percent in the first half of 1997.
Tin: Rise. Tin prices rose by $120 to $5,655 per ton.
Oil: Calm. Brent North Sea crude prices changed little this week and hovered around $18.3 per barrel on a quiet market.
Demand in the key U.S. market remained strong, analysts at Goldman Sachs investment bank said.
They nonetheless predicted that prices might fall in the coming months, as output from the North Sea and exports of Iraqi crude increase.
The CGES forecast that Brent prices would average 18.8 dollars per barrel in the last quarter of 1997.
Rubber: Mixed. Rubber prices on the London market rose by five pounds to 597.5 pounds per ton, while an absence of buyers on the Asian markets softened prices there.
This is despite falling currency values in South East Asia, which have made rubber relatively cheaper on the export market.
Cocoa: Warming. The cocoa market was on tender hooks ahead of the world's most important harvest in Ivory Coast, and prices rose by about 25 pounds to 1,125 pounds per ton.
Labor disputes in Indonesia prompted fears that shipments of cocoa beans from the country might be hampered.
The market was also troubled by persistent drought in the region.
Dealers were also paying close attention to weather forecasts in Ivory Coast, where the cocoa crop has been threatened by drought.
While weathermen have forecast rain there, the GNI trading house noted that "traders will want to see rain on the ground rather than on paper."
Coffee: Chilled. A rise in stocks of raw coffee in the United States, which is the world's dominant coffee drinker, caused prices to fall sharply this week.
Prices fell by $100 to $1,500 per ton.
Rainfall in Brazilian coffee-producing regions also put a dampener on the market. The water should ensure a healthy crop next year.
Nonetheless, the Brazilian Association of Coffee Exporters predicted that the Brazilian harvest would be 22.4 million sacks (of 60 kg) compared with a previous forecast of 24 million sacks. Colombian exporters also cut their crop forecast to 11 million sacks from 12 million sacks.
Tea: Calm. Tea prices in the London auction houses fell by one pence to 137 pence per kg, in the absence of high grade leaves from northern India.
Sugar: Melting. Sugar prices fell slightly amid quiet trading this week. White sugar prices fell by two dollars to $319 per ton.
The GNI trading house predicted that Brazil would reap a bumper harvest this year, which would serve to increase exports from the country.