Commodities prosper in 2003
(LONDON) From oil to gold, base metals to rubber, world commodity markets generally put on a strong performance this year as a global economic recovery and a plunging dollar fuelled demand.
Supply worries were another theme of 2003, which saw many commodities price reach levels not witnessed for years.
Gold: Gold was a star performer of 2003, jumping to near eight-year highs on the back of a plunging US dollar and a rush to safe-haven investment options amid the war in Iraq and terrorism fears.
An ounce of gold was fixed at US$410.80 at the end of last week on the London Bullion Market, up from about US$350 in late 2002. The last time prices were so high was in February 1996.
'The dollar decline has easily been the biggest factor, especially during the last three months of the year,' said Societe Generale analyst Stephen Briggs. 'Other factors were political risks and uncertainties, especially with the war in Iraq, fears about the economy and financial issues,' he said.
Prices were set to rise further, predicted an analyst, who has an average price target of US$425 for 2004.
But Mr Briggs warned that if the dollar recovers on the back on a stronger world economy then gold could struggle.
Silver: Silver also enjoyed a bumper year, climbing to four-year-plus highs in the slipstream of gold.
An ounce of the metal was quoted at US$5.72 per ounce last week, up over 20 per cent from a level of US$4.72 in late 2002.
Platinum and palladium: Platinum soared to 23-year highs, while palladium had a more lacklustre year.
The price of an ounce of platinum rose by about one third over the year to US$812 on the London Platinum and Palladium Market, against US$607 a year earlier.
But palladium lost ground in 2003 as a global supply surplus of 670,000 ounces weighed on prices. Palladium was at US$200 an ounce last week, down from US$236 a year earlier.
Base metals: Base metal prices gained strongly over 2003, with nickel at the vanguard, due to the declining dollar, a world economic recovery and a series of production-hitting strikes. The following are three-month prices per tonne on the London Metal Exchange last week for: Copper - US$2,245 from US$1,602 in late December 2002; Aluminium - US$1,595 from US$1,380; Nickel - US$16,100 from US$6,970; Zinc - US$1,005 from US$814; Tin - US$6,300 from US$4,180; Lead - US$700 from US$446.
Oil: Oil prices had another rollercoaster year as a strike in Venezuela, war in Iraq and the Opec cartel's tight grip on output drained stocks.
The price of benchmark Brent North Sea crude oil for February delivery closed at US$29.06 a barrel in London last week, against US$27.92 a year earlier.
In New York the reference light sweet crude February contract traded at US$32.86 against US$27.75 a year ago.
Oil prices are likely to weaken in 2004, predict analysts at investment bank Morgan Stanley. They forecast an average price of US$23.5 per barrel in 2004 against US$29 at present.
Rubber: Rubber prices bounced back as poor weather conditions in growing regions coupled with demand from the surging Chinese economy breathed new life into the market. The RSS index stood at 4.73 ringgit per kilo in Kuala Lumpur last week, up from about RM3.11 in late December 2002.
According to the Economist Intelligence Unit, rubber prices will rise by about 13 per cent during 2004, though the rally will slow the year after.
Cocoa: On LIFFE, the benchmark cocoa price (for March delivery) was at 906 a tonne last week from 1,353 a year earlier.
Coffee: Coffee prices had an up-and-down year as fears about the harvest in leading world producer Brazil proved unfounded.
Robusta (for March delivery) stood at US$714 per tonne on LIFFE last week, down from US$770 a year earlier. On New York's CSCE market, Arabica (for March delivery) traded at 62.50 cents a pound from 62.15.
Prices should retain their weak tone in 2004 because of the rapid rise of Vietnam as a heavyweight producer, analysts predicted.
Sugar: Bumper harvests, notably in Brazil and China, brought another year of price falls for sugar as supply easily outstripped demand.
On LIFFE, white sugar prices (for March delivery) approached the year-end at around US$187 per tonne, against US$212 a year earlier.
Cereals: On the LIFFE in London, a tonne of wheat (for March delivery) stood at 108.50 per tonne last week, against 59.30 a year earlier.
In Chicago wheat (March delivery) stood at 370.5 cents a bushel, up from 361.5 cents 12 months ago. A bushel of maize (March delivery) was 243.75 cents from 238.30 a year earlier.
Soya: Soya prices hit six-year highs during 2003 as poor supply and strong demand from China and the US combined to squeeze the market.
On the Chicago Board of Trade (CBOT), a bushel of soya (for January delivery) rose to US$7.41 last week, up from US$5.56 a year earlier.
Cotton: Cotton prices headed upwards to levels not seen for seven years thanks to demand from China. The Cotton Outlook Index of physical cotton rose to around 74.00 cents towards the year-end, from 55.50 in late December 2002.
Wool: Wool prices plunged as the impact of the Iraq war and the Sars virus in Asia hit demand, while the strong Australian dollar also undermined prices. The Australian Eastern index ended the year at A$7.75 per kilo, from A$16.50 a year earlier. - AFP
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