Palladium climbed above $900 an ounce early this week for the first time since February 2001 although it had eased back by midweek. The precious metal has risen more than 25 percent this year, amid worries about actual supply disruptions in South Africa and especially potential disruptions of shipments from Russia since that country began its latest involvement in eastern Ukraine in March.
Between them, Russia and South Africa account for around 80 percent of global palladium supply.
Prices have pushed higher on concerns that Russia might reduce its palladium shipments in retaliation for U.S. and E.U. economic sanctions imposed for its involvement in Ukraine. Unconfirmed reports were circulating this week that Russia plans to ban car imports from Western Europe and the U.S. if they impose further sanctions. Palladium is used in auto-catalysts.
September palladium on the New York Mercantile Exchange (Nymex) on Aug. 18 reached $902.75 an ounce, the highest for a most-active contract since Feb. 22, 2001. The September contract subsequently settled the day at $894.90. By close on Aug. 21, the September palladium had eased back to $879.90 an ounce. Investor profit-taking had pushed the metal as low as $836 on Aug. 6.
Sister metal, platinum, also used in auto catalysts, is trading well off the 10-month high seen in early July on the back of supply concerns coupled with strong demand from the auto sector. This high was reached despite an end in June of the five-month labour strikes at South African mines owned by Anglo American Platinum, Lonmin and Impala Platinum.
On Aug. 21, the platinum contract for October delivery on Nymex closed at $1,419.30 an ounce, down $9.9 on the day, while the spot metal was fixed at £1,419 an ounce in the pm fix on London’s Platinum and Palladium Market. This marked the spot metal’s lowest fix since May 1. In early July, the Nymex October contract has hit $1,515 an ounce while spot platinum was fixed at $1,512 an ounce in the pm fix on July 10, its highest point since September 4, 2013.
Gold prices fell to their lowest since mid-June amid the prospect of higher U.S. interest rates sooner than had been anticipated. The U.S. dollar surged against the euro and other major currencies on Aug. 20 after the minutes of the latest Federal Reserve policy meeting showed the central bank was gradually altering its stance into a more hawkish one, decreasing the appeal of gold.
Gold futures for December delivery on Comex dipped to $1,274.20 an ounce at one point on Aug. 21, the most active contract’s weakest level since mid-June, before settling at $1,275.40. However, analysts said any further escalation of the Iraq crisis or intensifying Russia-Ukraine tensions would prompt investors to move back into gold for its safe-haven appeal.
Oil slides lower
Oil markets remain under pressure, with Brent touching a near 14-month early this week and benchmark West Texas Intermediate (WTI ) a seven-month low on Aug. 21, although both have since recovered slightly. Weak demand, ample supplies – including higher output from Libya – and mininmal supply outages are all putting pressure on prices although geopolitical concerns hover in the background.
Brent crude for October delivery on London’s ICE Futures Europe exchange dipped to a near 14-month low of $101.09 a barrel on Aug. 18 before settling at $101.60. The crude benchmark recovered to trade at near $102 a barrel the following day, and was able to hold on to that level to settle at $102.63 a barrel on Aug. 21.
On Nymex, the WTI for October delivery dipped to $92.50 a barrel on Aug. 21, its lowest level since mid-January, before adding gains to settle $93.96 a barrel.
Cotton gains ground, sugar bounces off six-month low
Cotton futures reversed their recent downtrend which had taken the benchmark December contract on New York’s ICE Futures U.S. exchange to near a five-year low of 62.02 cents a pound at the beginning of August.
Short-covering at midweek helped propel the December contract to 66.20 cents, the strongest level since late July, before closing 2.03 cents up on the day at 66.19 cents. The gain was reported to be the biggest one-day gain for ICE cotton futures in five months. However, ICE December cotton fell back to finish 0.27 cents down on the day at 65.92 cents a pound on Aug. 22
Concerns over dry weather in parts of Texas, the U.S.’ biggest cotton-growing state, this month are also providing a fillip for prices. Cotton futures prices have been heading south in recent weeks on expectations of a bumper crop this season (Aug. 1-July 31) in the U.S., the world’s biggest exporter of the fiber, at a time when top consumer and importer China is winding down its stockpiling program.
Raw sugar futures initially fell further this week, pressured by continuing slow physical demand and rising world stocks. Benchmark October futures on New York’s ICE Futures U.S. dipped to a fresh six-month low of 15.38 cents a pound on Aug. 20 before rebounding to settle at $15.71 cents, up 0.25 cents on the day. Further gains were made the next day, with ICE October sugar finishing at 15.97 cents on Aug. 21. Traders attributed the uptick to short covering amid forecasts of rain in top producer Brazil which could slow the harvest.
Benchmark October white, or refined, sugar on London’s NYSE Liffe exchange also finished higher, settling at $432.60 a tonne on Aug. 21, a gain of $8 on the day. On Aug. 19, the contract had touched $419.50 a tonne, the weakest since Jan. 3.
Buoyed by continuing strong demand, December cocoa on ICE Futures U.S. reached a more than three-year high of $3,269 a tonne on Aug. 18 before tumbling on currency pressure the following day to settle at $3,203.50. December ICE cocoa finished just below this level on Aug. 21 at $3,203 a tonne. Benchmark December cocoa on Liffe closed £2 down at £2.035 a tonne on Aug. 20.
The arabica coffee market remained volatile amid continued uncertainty over Brazilian output this season, following prolonged drought in the country’s key coffee-growing areas early in the year. The harvest is now reported to be more than three-quarters complete, with harvesting expected to be concluded by the first week of September.
Arabica coffee for December delivery on ICE Futures U.S. finished at $1.8868 cents a pound on Aug. 21. The ICE December contract had reached $2.1110 on Aug. 1, a three-month peak.
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