A bigger-than-expected drop in U.S. crude stocks for last week also provided support for U.S. crude prices. The EIA on June 11 reported a 2.6-million barrel drop in U.S. commercial crude inventories to 386.9 million barrels during the week to June 6.

Gold adds gains on Iraq worries

Gold prices added gains this week amid concerns about the ramifications of the intensifying violence in Iraq. The precious metal is being supported by its appeal as “a safe-haven” investment in times of geopolitical turmoil.

Gold for August delivery on Comex settled$1,261.20 an ounce on June 11, almost $17 up on a week ago.

The precious metal had come under pressure in recent weeks amid expectations that U.S. economic recovery will continue to gather pace, leading the country’s Federal Reserve to raise interest rates sooner than earlier had been anticipated by the market. August gold on Comex dropped to an 18-week low of $1,240.20 on June 3.

Softs in mixed direction

Cocoa markets remained underpinned by expectations for a global deficit amid a strong demand outlook for the key chocolate-making ingredient. September cocoa on New York’s ICE Futures U.S. exchange added to last week’s gains to touch three-year highs with the contract settling at $3,134.50 a tonne at midweek. Cocoa on London’s NYSE Liffe exchange was also higher, finishing at £1,985 a tonne on June 12, up £24 on a week earlier.

Hefty global surpluses continue to weigh on raw sugar futures, while a spot surplus of the sweetener is adding further pressure. ICE raw sugar futures slipped below 17 cents a pound this week. The most-active raw sugar contract on ICE Futures U.S., presently July , touched a seven-week low of 16.69 cents a pound on June 12 . ICE July raw sugar – which expires on June 30 – had settled at 16.83 cents the previous day.

Continuing uncertainty over the extent of the drought-damage to arabica coffee crops in top grower Brazil provided a fillip for ICE arabica futures this week. The July contract on ICE Futures U.S. gained 3.5 percent to settle at $1.7160 a pound on June 11. A week earlier, on June 3, the arabica front-month had dipped to its lowest since late March at $1.6735 a pound. The September arabica contract finished at $1.7430 a pound at midweek.

Traders expect the volatility in arabica futures markets to continue until a clearer picture of Brazil’s 2014-2015 (April 1-March 31) crop emerges later in the harvest, which is now underway.

Robusta coffee futures for September delivery on London’s NYSE Liffe finished at $1,960 a tonne on June 12, up $46 from its settlement a week ago.

ICE July cotton futures, meanwhile, closed at 85.51 cents a pound at midweek, down 0.57 cents from their week-earlier finish.The latest U.S. Department of Agriculture’s World Agricultural Supply & Demand Estimates (Wasde), report, released June 11, was bearish in its outlook for cotton.

Projections for 2014-2015 showed higher U.S. production and ending stocks compared to last month’s forecasts, with the production forecast raised to 15 million 480-pound bales, up from 14.50 million in May. U.S. ending stocks were projected higher at 4.30 million compared with 3.9 million in May. The country is the world’s biggest producer and exporter of cotton.

The USDA’s 2014-2015 world projections include higher ending stocks and a decline in world trade compared to its May report. The government department raised its forecast of global ending stocks for 2014-2015 by 1.05 million 480-pound bales to 102.71 million. World cotton exports were projected to decline to 35.56 million, down from 36.29 million in May’s forecast, with lower imports forecast for the world’s biggest buyer, China, as well as Pakistan. Higher imports were expected for Vietnam, however. The USDA in its latest Wasde report projected China’s imports at 8 million 480-pound bales in 2014-2015, down from the 8.5 million forecast in May.

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.