WORLD COMMODITIES TRADING
World oil prices mostly steady
Oil prices were mostly steady on Friday, ending the week slightly lower as trade tensions stoked by a US move to hike tariffs on Chinese goods overshadowed tightened global supplies and expectations of rising US refining demand.
Brent crude oil settled 23 cents, or 0.4%, higher at $70.62 a barrel, but posted a weekly loss of 0.3%. US West Texas Intermediate (WTI) crude futures ended 4 cents lower at $61.66, with a weekly loss of 0.5%.
After a volatile week, investors were worried over the possibility of a protracted and bitter US-China trade war, despite last-minute efforts to salvage a deal.
US President Donald Trump on Friday said he was in no hurry to sign a trade deal with China as Washington imposed a new set of tariffs on Chinese goods and negotiators ended a second day of talks.
Growing trade tensions between the world’s two largest oil consumers could affect oil demand. The United States and China together accounted for 34% of global oil consumption in the first quarter of 2019, data from the International Energy Agency showed.
Prices gained some support on Friday as investors anticipated US Gulf Coast and Midwestern refineries, which are coming out of seasonal maintenance, to boost oil demand ahead of the US summer driving season.
Gold prices up and set to post weekly rise
Gold prices rose on Friday and were set to post a weekly rise as the United States raised tariffs on Chinese goods, exacerbating fears of a global economic slowdown, while palladium surged more than 5% on technical buying and short covering.
The United States intensified a tariff war with China on Friday by hiking levies on $200 billion worth of Chinese goods. US President Donald Trump said on Friday he was in no hurry to sign a trade deal with China.
Spot gold gained 0.2% to $1,286.56 per ounce and is up about 0.6% so far this week.
US gold futures settled up 0.2% at $1,287.40.
Palladium climbed 4.7% to $1,354.51 per ounce as of 1:32 pm EDT (1732 GMT), having fallen to its lowest since Jan. 4 at $1,263.85 in the previous session. The metal was on track for a second straight weekly decline of about 1.2%.
Bullion was also supported by a weaker dollar which fell after data showed a smaller-than-expected rise in the US consumer price index last month.
Silver was up 0.2% at $14.78 per ounce, while platinum rose 2.3% to $863.75. Silver is on course to register a second straight week of declines, while platinum looks set for a third weekly drop in a row.
Brazil cane mills swing back to ethanol as sugar recovery fizzles
Brazilian cane mills appear to have scrapped plans to boost sugar production this year, reverting to a heavy focus on ethanol in a shift from the start of the year, according to millers and analysts. As expectations of a global sugar deficit have failed to boost prices, leaving benchmark sugar values near multi-year lows, Brazilian mills have turned back to their last season’s favorite, ethanol, which is following gasoline prices higher at the pump.
The ease with which Brazilian mills switch from producing sweetener to fuel makes them a key swing factor in sugar markets. The global sugar surplus dwindled last year as Brazil, the world’s largest producer, cut output from its center-south cane belt by almost 10 million tonnes. Franciele Rivero, an analyst at sugar trader Group Sopex, expects Brazil to repeat a 35 percent cane allocation to sugar this year, in line with last season’s all-time low. Some Brazilian mills, such as the Alcoeste mill in Fernandópolis, Sao Paulo, have already washed out sugar export contracts this year.
Copper nears three-month low before US-China trade talks
Copper fell to a near three-month low on Wednesday on concerns over a potential resumption of tit-for-tat trade tariffs between the United States and China ahead of last-ditch negotiations. US President Donald Trump’s threat to increase tariffs on $200 billion worth of Chinese goods on Friday has raised the risk of an escalation in the spat between Washington and Beijing. This could further slow the global economy, while clouding the outlook for demand from top metals consumer China. The two sides will hold last-ditch talks in Washington on Thursday and Friday.
Benchmark copper on the London Metal Exchange ended 0.5 percent lower at $6,148 a tonne, after touching its lowest since Feb. 15 at $6,119. China’s unwrought copper imports rose 3.6 percent in April from the previous month, according to data released by the General Administration of Customs on Wednesday, as demand gathered momentum at the start of the peak-consumption second quarter.
Robusta coffee recovers after hitting nine-year low
Robusta coffee prices on ICE recovered on Wednesday after hitting a nine-year low earlier in the session due to sales by Vietnamese exporters who have faced pressure to hedge their produce. July robusta coffee was up $15, or 1.2 percent, at $1,310 a tonne by 1359 GMT, recovering from its lowest since March 2010 at $1,267. A dealer said Vietnamese exporters holding large physical stocks of unhedged coffee have been tempted back into the futures market to lock in prices before they fall further. In Brazil, the harvest of conilon, the robusta variety grown there, is underway and expected to be strong, exacerbating existing concerns about oversupply. Also weighing on coffee, the Brazilian real hit its weakest against the dollar in almost a week on Tuesday. A weak real can encourage selling of dollar-denominated commodities such as coffee. July arabica coffee rose 1.25 cents, or 1.4 percent, to 89.30 cents per lb after dropping to a 13-year low of 87.80 cents on Tuesday.
Vale iron ore output, sales slump after deadly Brazil dam burst
Brazil’s Vale SA said on Wednesday that its iron ore production and sales slumped in the first quarter from a year earlier, reflecting the impact of the deadly collapse of a tailings dam at Brumadinho in late January. Iron ore output fell 11 percent to 72.87 million tonnes while sales of the commodity slid 22 percent in the three-month period to 55.416 million tons. The world’s largest iron ore exporter shuttered various mines after the dam at Brumadinho collapsed, unleashing a torrent of toxic mud that buried nearby buildings, including a company cafeteria, killing 236 people, with 34 still missing. Vale shares, which have gained 16 percent from the low they hit immediately after the disaster, were down 1 percent on Wednesday, declining a bit more steeply than other global mining stocks, which were also mostly negative as iron ore prices slipped.
Milk production continues to fall
Australian milk production continues to plummet, as drought in Queensland, NSW and northern Victoria takes a toll. The latest figures from Dairy Australia reveal the changing face of milk production in Australia, with the Queensland industry shrinking to be the smallest in Australia. The figures for March reveal Australia’s milk production was down 10.6 percent compared with March 2018. Year-to-date production is down 6.7 percent. New Zealand production was also down for March. Fonterra’s Global Dairy Update report released on Friday revealed New Zealand milk production was down 8 percent in March compared with the same period last year. But year-to-date production there is up 3 percent. The Australian figures showed marked differences between states.
Gold slips from over three-week high on US-China trade deal prospects
Gold prices slipped after climbing to a more than three week peak on Wednesday as safe haven demand eased after the White House said it had received an indication from China that it wanted to make a trade deal, easing fears over the dispute’s potential impact on global growth. Trade delegations from Washington and Beijing are scheduled to begin their latest round of talks on Thursday. Spot gold was 0.1 percent lower at $1,282.48 per ounce at 11:20 am DT (1519 GMT), while US gold futures also dipped 0.1 percent to $1,283.9. US stocks edged higher on Wednesday, ahead of the talks that will be held a day before the United States will raise tariffs to 25 percent from 10 percent on $200 billion worth of Chinese imports. Earlier, gold prices climbed to their highest since April 15 at $1,291.39 per ounce on concerns over the trade dispute’s potential impact on global growth. Lower treasury yields and higher physical demand from India in a festive season also drove prices up earlier in the day, according to Suki Cooper, precious metals analyst at Standard Chartered Bank.