Crude oil prices fell sharply early this week after U.S. President Barack Obama asked Congress to delay a vote on military action against Syria while the administration explores a Russian proposal to eliminate Syria’s chemical weapons.

In London, the October contract for North Sea Brent crude dropped to its lowest level since Aug. 26,  closing on Sept.10 at $111.25 a barrel on ICE Futures Europe. The U.S. light, sweet crude benchmark, West Texas Intermediate (WTI), fell 1.9 percent to $107.39 on New York’s Mercantile Exchange (Nymex), the lowest close since Sept. 4.

Crude futures regained some of their early week losses by midweek, however, with October Brent regaining ground to $112.50 on Sept. 11 before closing at $111.57. Meanwhile, WTI for October delivery reached $107.82 a barrel by midday on Sept. 11.  Some analysts believed the previous day’s sell-off had been overdone as Libyan crude outages continue to worry the market and the Syrian situation, though eased, has not been resolved.

Gold also fell after the U.S. president delayed a decision on a military strike on Syria. Uncertainty about the direction the U.S. Federal Reserve may take on economic stimulus withdrawal at next week’s meeting is also weighing on market sentiment.

The most actively traded gold contract, December, on the Comex division of Nymex dropped to $1,364 an ounce by close on Sept. 10, a level not seen since Aug. 15.  At the end of August, the precious metal reached a 15-week high of $1,434 amid U.S. threats of a military strike on Syria.

Platinum and sister metal palladium continued to trade near their respective three-week and eight-week lows seen last week. Platinum for October delivery on Nymex closed at $1,474.10 an ounce on Sept.10  while December palladium settled at $692.65.

Copper edged higher at midweek after experiencing early-week losses. The red metal was bolstered by hopes of improved demand from China and easing tensions over Syria. China trade data this week indicated the country’s overall imports and exports in August were stronger than expected and built on July’s positive data. However, like gold investors, copper investors remain cautious ahead of next week’s U.S. Fed meeting.

Three-month copper on the London Metal Exchange (LME) moved up to $7,190 a tonne on Sept. 11 after falling 0.3 percent to end at $7,170 at the PM kerb close the previous day. The red metal has risen more than 8 percent since the price touched a three-year low of $6,613 a tonne on June 24, mainly on account of the strengthening indications that the economic slowdown in China may be bottoming out. China is the biggest consumer of copper, typically accounting for around 40 percent of world demand.

New York cocoa touches near one-year high, cotton picks up

Cocoa remained the star performer among the soft commodities with cocoa futures in New York powering up to near one-year highs on continued concerns about West African supplies. The December contract on ICE Futures U.S. climbed to $2,598 a tonne in early trade on Sept. 11, the highest since mid-September 2012.

West Africa has “seen only roughly half its usual rainfall in recent weeks and is fueling fears about the next main harvest due to begin in October,” Commerzbank said in a Sept. 9 note. The region typically accounts for more than 70 percent of global cocoa output. Côte d’Ivoire’s main growing regions saw improved rainfall last week but analysts said it is too soon to tell if the improved precipitation brought any benefits to the main crop.

Adding to the uncertainty over supply is Ghana’s plans to further reduce subsidies for fertilizers for cocoa farmers with the aim of phasing them out completely over the next three-to-five years. The move is a bid to cut costs amid weak prices. Cocobod, the country’s cocoa board, currently pays approximately half the cost of fertilizer distributed to the country’s farmers under the program, which is aimed at raising annual output of the world’s second largest producer.

London cocoa at midweek was trading at £1,689 a tonne on NYSE Liffe and not far off last week’s one-year highs of £1,706 a tonne, basis the most-active contract – currently December.

Cotton futures were higher at midweek on the back of signs that demand in China, the world’s biggest importer of the fiber, will increase. China’s National Development and Reform Commission (NDRC) announced Sept. 9 it would initiate the temporary purchasing and storage of cotton for 2013 that day. The government move to build reserves follows a fall in prices below a price-support threshold for five consecutive days. Last week, cotton futures prices on New York’s ICE Futures touched a three-month low.

China’s government earlier this year said it planned to continue the reserve-building program it launched in 2011 and which has led to strong import buying by the country.   However, there has been some concern in recent weeks that China was considering implementing changes to the program. In its latest Wasde report on Aug. 12, the U.S. Department of Agriculture (USDA) projected China’s cotton imports would fall 46 percent to 11 million 480-pound bales in the 2013-2014 cotton year starting Aug. 1.

Cotton for December delivery climbed to 84.83 cents a pound in early trade on New York’s ICE Futures U.S. on Sept.11, up from 82.18 cents a week ago.

Raw sugar futures were also higher with raw sugar for October delivery on ICE Futures in New York reaching 17.25 cents a pound by midday on Sept. 11, a level not seen since mid-August. Prices moved higher after Brazil’s sugar cane industry association Unica said mills in the country’s main sugar-growing region – the Centre-South – produced 3.7 percent less sugar at 3.21 million tonnes in the second half of August than in the same period in 2012.  Ethanol production from the Centre-South, however, increased 8.3 percent to 2.08 billion liters. For the year to Sept 1., the region’s sugar-ethanol mix stood at 44.4 percent sugar to 55.6 percent ethanol compared with 49.2 percent for sugar and 50.8 percent for ethanol in the same  period in 2012-2013, Unica’s data showed.

After sinking to a four-year low of $1.525 a pound last week amid a prolonged decline on the back of a global supply glut and a large harvest from top producer Brazil, arabica coffee for December delivery jumped 3.1 percent to $1.206 a pound during morning trade on ICE Futures U.S., heading for the biggest gain since mid-July on concerns that dry weather in Brazil may cause damage to some of the country’s coffee trees.

While care has been taken to ensure that the information contained in this report is accurate, it is supplied without guarantee. The author, Lynda Davies, can accept no responsibility for any errors or any consequence arising from the information provided.