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.