Food: Raw materials – -

Food: Raw materials – -
Food: Raw materials – -

London (awp/afp) – Copper ended the week almost in balance on the London Metal Exchange (LME), the market remaining well supplied, with analysts however warning of probable mineral shortages.

The International Copper Study Group (ICSG) reported a market surplus of almost 300,000 tonnes for the first four months of 2024 in its latest report published on Thursday. That is to say “nearly 125,000 tonnes more than the previous year”, note Commerzbank analysts.

This oversupply situation may not last. Analysts warn of “a shortage of copper ore” to come, mentioning for example the “significant increase” in Chinese imports of copper scrap and waste to find an alternative to copper ore, which is rarer.

“Overall, this means that concerns over future refined copper supply are supporting prices, although supply currently appears abundant,” the analysts summarize.

MUFG analysts also point to the latest Chinese customs data, which indicates that copper exports hit a record in May.

“Weak domestic demand (has) forced traders to seek foreign markets for their surpluses,” they say.

Investors remain attentive to Chinese economic data and demand, as the country is a major consumer of industrial metals.

Around 3:30 p.m. GMT (4:30 p.m. in Paris), on the LME, a tonne of copper cost $9,676, compared to $9,741 seven days earlier at the close.

Gold is failing

Gold remained almost stable over the week, the bearish factor of the fallout from bets on American monetary easing being offset by the safe-haven quality of the yellow metal, popular in times of geopolitical concerns.

The price of gold suffered from the expectations of economists, who predict “that the first cut in interest rates in the United States will probably not occur before the end of the year”, explains Barbara Lambrecht, analyst at Commerzbank .

Investors notably pushed back their expectations of a rate cut from the Federal Reserve (Fed) after the publication of data on Friday showing that housing prices broke a new record in the United States.

Figures which could signal a still stubborn rise in prices, and therefore encourage the Federal Reserve to postpone its first rate cut.

The prospects of rate cuts have so far favored the price of gold, because they penalize the yields of the greenback and government bonds, which become comparatively less attractive for investors.

Conversely, rates maintained high for longer weigh on the price of the yellow metal.

The price of an ounce of gold initially returned this week “to the average range of 2,300 dollars”, driven by “political uncertainties in France” and “persistent geopolitical tensions” helping to turn investors away from risky assets, summarizes Han Tan, Exinity analyst.

The uncertainty around the anticipated legislative elections in France is making markets nervous with the possibility of a government led by the far-right National Rally (RN) party or by the left-wing alliance Nouveau Front Populaire which makes some investors fear excessive budgetary spending.

An ounce of gold traded at $2,327.85, compared to $2,333.04 seven days earlier at the close.

Reheated coffee

Coffee prices rose slightly over the week, driven by fears of a shortage of supplies due to smaller than expected harvests in Brazil and dry weather in Vietnam.

Among agricultural raw materials, cocoa and coffee continue to operate at “very high price levels”, comment Societe Generale analysts.

“Reports of insufficient supplies [de café] which could have worsened” have pushed prices upwards, underlines Jack Scoville, analyst at Price Futures Group.

The reduced supply of robusta and lower-than-expected harvests in Brazil are worrying investors, the analyst continues.

“The forecast of a few more weeks of dry weather in Vietnam” also raises fears for the crops, he says.

Brazil is the world’s leading producer of arabica coffee and Vietnam of robusta.

On ICE Futures US in New York, the pound of Arabica for delivery in September was worth 225.80 cents, compared to 224.40 cents seven days earlier.

On the London Liffe, a tonne of robusta for delivery in September was worth $4,095 on Friday compared to $4,009 a week ago at the close.

lul-emb/ved/LyS

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