New York/London, 24 Aug Base metals and oil rose on 23 August as investors in commodities distanced themselves from credit market turmoil, despite worries about the health of the US economy.
In the agricultural sector, European wheat futures hit historic highs and US soybeans futures rallied for a second straight day. Cocoa led soft commodities with a 2% gain in New York and London trade.
“Fundamentals are taking over,” a European grains trader said, referring to a change in sentiment since commodities fell with financial markets last week amid a global credit crunch.
Still, analysts said investors remained wary that more turmoil lay ahead in the US housing loan market. Accredited Home Lenders Holding Co, HSBC Holdings and Lehman Brothers on 22 August cut more than 3,000 jobs in total. The largest US mortgage lender, Countrywide Financial Corp, on 23 August cautioned that the housing market downturn could lead to a recession.
“I think there’s still quite a bit of nervousness,” said Aljoscha Haesen, senior analyst at Forsyth Partners, a UK-based funds manager.
“But at the same time, investors realise that the US is not necessarily the driving force behind the commodities run that we have been seeing for the past few years; it’s emerging market growth that is driving that,” Haesen said.
On the industry front, the European Union said it will allow Britain to export live animals, meat and dairy products to other EU countries from all parts of the UK except Surrey, where two outbreaks of foot and mouth disease were confirmed this month.
French wheat hits record; Cocoa/US soybeans up
Crude oil prices rose as Mexico took stock of its oil rigs and ports following Hurricane Dean. US crude prices settled up 57 cents to $69.83 a barrel, while London crude rose $1.16 to $69.86 a barrel.
US copper futures were up too, extending a bounce from last week’s 4-1/2 month lows. Copper for December delivery on the New York Mercantile Exchange’s COMEX division settled up 5.40 cents, or 1.68%, at $3.2765 a lb.
In precious metals, US gold futures for December traded on COMEX settled down 30 cents at $668.40 an ounce.