Commodity Blog

Archive for January 8th, 2010

Analysts predict that crude oil’s rally will stop at $88 level. The level of $88 was a support in 2007 and at the end of 2008. Price support level at a falling market may become resistance when prices are beginning to rise. Oil rose to $83.52 per barrel (a highest level in 14 months) on January 6th.

Sugar prices increased the fourth time this week reaching the highest level in almost three decades on expectation that countries including India, the greatest buyer in the world, are going to raise imports to ease a growing supply shortage. As a result of surge in global prices sugar mills in India are forced to delay imports because high prices made overseas purchases unprofitable. Sugar futures more than doubled in the past year, touching a 29-year high yesterday in New York, as adverse weather damaged cane crops in India and Brazil, biggest growers in the world. March futures for raw-sugar delivery gained $0.0031 (1.1 percent) to $0.2831 per pound by 11:19 on ICE Futures U.S. in New York.

Latest commodity prices (ICE, NYMEX, CME) as of 17:41 GMT:

Oil (Brent) — $81.59
Gold — $1,133.50
Silver — $18.40
Palladium — $424.50
Platinum — $1,546.76
Copper — $7,496.00
Aluminum — $2,295.00
Nickel — $18,075.00
Zinc — $2,539.00
Cocoa — $3,301.00
Sugar — $27.85
Corn — $417.50
Soybean — $39.28

The price of iron ore in China, the biggest buyer in the world, reached the highest level in more than a year as Chinese mills began “panic buying”. Spot price was pushed up by panic buying by steel mills on concern about availability of reduced spot cargoes from Australia at a time due to contractual commitments. Government’s stimulus spending boosted steel demand making Chinese mills to increase iron ore purchases.

Annual talks of iron-ore suppliers with steelmakers were carried out to fix benchmark contract prices for the 12 months from the start of the Japanese financial year, April 1st. The four-decade-old pricing system was broken last year, spurring demand for cargoes settled on the cash market, after steel mills failed to make agreement with the three largest suppliers.

Contract prices may go up 10 percent to 40 percent on increases in the cash price. The cash price is about 62 percent higher than contract price in the last year. Forecast for the average 2010 cash iron ore price, including freight costs, rose by 20 percent to $111 per metric ton.