The stoppage is costing the three affected producers around 9,900 ounces of platinum and an estimated 5,000 ounces of palladium daily in lost output. Lonmin in a statement this week warned that it will not achieve its sale guidance for this fiscal year ending Sept. 30, 2014. The company reported it has lost around 90,000 saleable platinum ounces as a result of strike action to date. It had targeted sales of in excess of 750,000 platinum ounces for the fiscal year.
Lonmin said it now “expects sales for the full [fiscal] year to fall further the longer the protected strike continues”, adding that the unit cost as a result will be “negatively impacted”.
The strike has cost Implats approximately 90,000 ounces of lost platinum production at its Rustenburg operation as of this week, amounting to around R2 billion ($186.1 million) in revenue lost (calculated at the current basket of metal prices), CEO Terence Goodlace said in a company statement this week.
Amplats reported it has lost approximately 4,000 platinum ounces of daily production, translating into R100 million of revenue value per day as a result of the stoppage, which has affected its Rustenburg, Union and Amandelbult operations, according to a company statement this week. All of Amplats’ South African process operations, the Mogalakwena mine and the majority of its platinum joint-venture operations continue to operate normally, it said.
Arabica soars above $2 a pound
Among the soft commodities, arabica coffee remains the best-performing soft commodity so far this year. This week, the May contract on New York’s ICE Futures U.S. exchange surged above $2 a pound for the first time in two years as the market continues to worry about the extent of crop damage in top grower and exporter Brazil’s key coffee-growing regions after protracted drought conditions.
May arabica gained 16.95 cents on Mar. 5 to settle at $2.024 a pound, a near 14 percent gain over the past week. Arabica futures have advanced around 80 percent so far this year on the Brazilian crop concerns.
Drought is also affecting top robusta coffee bean producer and exporter, Vietnam. The Vietnam Coffee-Cocoa Association (Vicofa) said this week the country’s coffee production will be “significantly lower” than last year on account of the dry weather spell being “quite severe” in Vietnam’s main coffee-growing area in the Central Highlands.
Prices for robusta coffee futures have risen around 20 per cent this year. The March contract on the London-based NYSE Liffe exchange settled at $2,113 a tonne on Mar. 5, a more than 25 percent gain on where it began 2014. Liffe May finished at $2,065.
Worries about drought damage in Brazil took raw sugar futures to a four-month high. Brazil is the biggest grower and exporter of the sweetener. Raw sugar for May delivery on ICE Futures U.S. touched 18.47 cents a pound in trading on Mar. 6. The previous day the May contract had settled at 18.28 cents.
May refined, or white, sugar, on London’s NYSE Liffe exchange closed at $485.30 a tonne on Mar. 5,
ICE cocoa futures continued to consolidate this week after reaching a 28-month high on Feb. 21. Concerns about a global cocoa shortfall amid strengthening demand for the key chocolate-making ingredient are providing support for cocoa. The commodity was the star performer in 2013, with futures prices in both New York and London markets finishing the year 20 percent up on where they began. This year, cocoa futures prices have advanced almost another 10 percent as demand continues to outstrip supply.
Cocoa futures on New York’s ICE Futures U.S. exchange finished $14 up at $2,969 a tonne at midweek. ICE cocoa futures hit a 28-month intraday high of $2,975 on Feb. 21.
Late last week, the London-based International Cocoa Organization (ICCO) forecast a second successive year of world production deficit. In its first forecast for 2013/14, which began on Oct. 1, the ICCO estimated world cocoa production falling 115,000 tonnes short of expected consumption. While output will rise this season, by 4.1 percent to 4.104 million tonnes from a revised 3.942 million tonnes in the prior year, it will not be sufficient to meet consumption – as measured by grindings – which is seen growing by 2.5 percent to a record 4.178 million tonnes, the ICCO reported Feb. 28.
In addition to the forecast record consumption, the cocoa body cited concerns about black pod disease in Cameroon, a disease also affecting Nigeria’s cocoa crop, and Indonesia’s ageing cocoa trees, as the main reasons for the shortfall. ICCO expects Cameroon’s cocoa output to fall by 15,000 tonnes to 210,000 tonnes in 2013/14 and Nigeria is projected to produce a smaller crop at 220,000 tonnes. In Indonesia, ICCO expects production to fall to a 10-year low of 410,000 tonnes.
The cocoa body in its latest report also revised upwards the size of the global shortfall of cocoa in 2012/13 by 14,000 tonnes to 174,000 tonnes.
Meanwhile, U.S. cotton futures remain supported by concerns about tight supplies of the fiber. The market is expecting the U.S. Department of Agriculture (USDA) next week to reduce its outlook for ending inventories in the U.S., the world’s biggest cotton exporter. The USDA World Agricultural Supply and Demand Estimates report (Wasde) is scheduled for release Mar. 10.
The most active May cotton contract on ICE Futures U.S. closed 1 percent up at 89.22 cents a pound on Mar. 4. Last week, May cotton had touched a six-month high of 90.44 cents in intraday trading, the highest for a second position contract since late August.
While care has been taken to ensure that the information contained in this report is accurate, it is supplied without guarantee. The author can accept no responsibility for any errors or any consequence arising from the information provided.
