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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Alex who wrote (12090)	5/23/1998 2:54:00 PM
From: Eashoa' M'sheekha	Read Replies (1) \| Respond to of 116836

Commodities feel Asian heat Turmoil in Indonesia adds to pressures on worldwide prices By DAVID THOMAS Economics Reporter The Financial Post Economic and political uncertainty in Asia are back on the front burner and commodity prices are feeling the heat, with various indexes hitting five-year lows in recent days. The latest factor to raise uncertainty is the change of power in Indonesia with Suharto resigning as president in favor of B. J. Habibie.(Friend of Bill's? yuk yuk yuk) The turmoil in Indonesia and fears of an escalation of the region's debt crisis have beaten down the global prices of oil, metals and agricultural products."You can trace a lot of the problems we've seen in commodities to what's going on in Asia," said Doug Porter, senior economist at Nesbitt Burns Inc. "The setback delivered another body blow to prices." The Goldman Sachs commodity index, heavily weighted to energy prices, hit 157.39 points Wednesday,a day after crude oil touched a 10-year low of US$12.98 a barrel on the New York Mercantile Exchange. The Goldman Sachs index recovered slightly at the end of the week,but remains 31% below its 1997 high. Oil prices have suffered from other factors, including oversupply and poor demand resulting from a warm winter in the northern hemisphere but the downturn in Asia is a big negative, said Teresa Courchene, senior economist at Toronto Dominion Bank. Prices have fallen about 40% in the past year and 12% in the past month alone. The TD commodity price index, to be released next week, is expected to show a drop of about 3% in May, sending it to a five-year low. The index is weighted according to the value of commodities exported by Canada. May will show weakness "across the board," Courchene said. Base metal prices have turned down in recent weeks, with nickel and copper off 12% and 9.5% in May. "Again, a lot of that weakness has to do with the Far East," said Patricia Mohr, economist and commodity specialist with Bank of Nova Scotia. Mohr prepared Scotiabank's May commodity report, also due out in the coming week, and said the numbers look poor. The weakness in prices is widespread, analysts said. The Commodity Research Bureau index of futures prices, weighted to agricultural products, hit a 4 1/2-year closing low of 219.75 Thursday and briefly dipped below 218 Friday. The renewed slide in commodity prices has followed Asian equity markets lower. Both had managed first-quarter rallies after sharp declines beginning last fall.The South Korean stock market, for example, is down 39% since March 1 after gaining 38% in the first two months of the year. Signs of recovery are few. "There were expectations at the beginning of the year that prices were set to snap back," said Mohr."Now we'll have to wait until later in the year for signs of a recovery."Subodh Kumar, equity strategist at CIBC Wood Gundy Securities Inc., predicted it will take another six months for demand to pick up and commodity prices won't see a recovery until 1999. (They kinda lose it here,don't you think?) Forestry and gold stocks, which are already up 22% and 9% on the year, don't look to be attractive buys.However, the oil sector, which is down more than 5% in 1998, is now "interesting for people who are willing to wait." Nesbitt Burns's Porter sees weakness across the entire resource sector. "It's really just a matter of who'll be least weak."