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Commodity Wrap: Copper touches record high, Nickel hits two year high

Last updated: 13:22 15 Feb 2011 GMT, First published: 14:22 15 Feb 2011 GMT

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Commodity markets are seeing another day of mixed trade today, lacking conviction despite data from China overnight showed the inflation rate in the country falling in January, helping to calm fears they will need to implement aggressive fiscal tightening measures.


Over the past two sessions the divergence in the WTI Nymex contracts away form the broader oil market has widened, with Brent crude pushing past $104/bbl while at the same time the front WTI contract actually fell, now trading around $85.20.


This came as the Europeans benchmark benefited disproportionately from ongoing protests in the Middle East. Although this gap in the front contracts has been largely assigned to the high level of stocks available for immediate delivery in the US, and has some discrepancies due to the differing expiry dates of the two contracts, the spread between the second month-out contracts for both has also widened in recent days, to around $4/bbl.


The precious metals complex is mirroring yesterday’s price action today; gold underperforming its more industrious counterparts as the higher-beta names pick up steam on cross-sectional demand.


That said, the yellow metal has been making some fair gains in Europe as it benefits from safe haven moves in the region, currently holding near 4-week highs denominated in euros at around €1,015/oz.


The base metals complex has seen somewhat ore interesting price action this week, seeing some profit taking today after Chinese import data helped push iron ore and copper prices particularly yesterday; the two metals seen as key to the country’s developing industrial powerhouse.


This morning copper hit a record high in London of $10,200/tn before profit taking kicked in, while nickel hit the highest point since May 2008 at $29,000/tn. The spot price for iron ore meanwhile is nearing the $200/tn mark, with $190/tn reported yesterday from China’s key port of Tianjin.


All this said, base metals prices are heading in to the US session generally lower as positions are consolidated, again with the Chinese inflation news doing little to help.


The agricultural complex has also been seeing fairly lacklustre trade today, generally weaker amid news yesterday that the US growing area for corn this year is to be extended by over 4% to 92 million acres, while the area for soybeans is expanding 1% to a record 78 million acres, according to the latest data from the US Department of Agriculture (USDA).


The area for cotton is to be expanded by 19% to 12.8 million acres on the back of record prices, while the overall average increase for the eight key plants should be around 4%.

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