Gold touched a six-week high on China growth worries before taking heavy losses. Oil prices rebounded on reports of lower Saudi Arabian supplies released to the market last month.  ICE cocoa futures edged lower while Arabica coffee prices fell on anticipated rains in Brazil’s main-growing areas. Raw sugar futures dropped to a three-week low.

Gold initially moved higher this week, climbing to a six-week high above $1,250 a troy ounce on Oct. 22, as worries about slowing economic growth in China and elsewhere boosted investor appetite for the precious metal. But the gold price took heavy losses on Oct. 23 as a firmer U.S. dollar and robust economic data from the U.S. dented the precious metal’s appeal.

U.S. gold futures for December settlement  on the Comex division of the New York Mercantile exchange (Nymex) settled at  $1,251.70 a troy ounce on Oct. 22  the highest in six weeks. Meanwhile,  spot gold hit its strongest level since Sept. 10 on London’s bullion market at $1,255.20 as investors sought gold as a safe-haven. But Comex gold closed more than $16 down on Oct. 23 at $1,229.10, while spot gold in London was fixed at $1,231.75 an ounce in the pm fix.

China’s economy grew at its slowest pace in more than five years in the third quarter to Sept. 30, with GDP slowing to 7.3 percent compared to 7.5 percent in the same prior-year quarter, official data from that country showed on Oct. 22. The third quarter rate is the weakest since the first quarter of 2009, and while slightly above market forecasts of 7.2 percent, the rate was slower than the 7.5 percent growth recorded in the second quarter of 2014. This latest GDP figure has sparked speculation that the world’s second largest economy will miss its official growth target of 7.5 percent for 2014, marking the first time this has occurred since 2009.

Slowing growth in China has reinforced concerns about the health of the global economy. There continues to be deep worries that  a much needed recovery in the Eurozone economy is stalling, triggering fears that the 18-country region could soon dip back into recession.  The Eurozone unexpectedly saw a marginal upturn in growth in business activity this month, but this masked the steepest fall in output prices since the start of the global crisis and renewed job losses, according to surveys by Markit Economics. The Markit Composite Flash Purchasing Managers’ Index, based on surveys of companies across the region, rose to 52.2 from September’s 10-month low of 52.0.

“The Eurozone PMI rose in October but anyone just watching the headline number misses the darker picture painted by the survey’s other indices, which show the region teetering on the verge of another downturn,” Chris Williamson, chief economist at Markit, said in a statement.

Growth of new orders slowed closer to stagnation and backlogs of work fell at a faster rate, causing employment to be cut for the first time in nearly a year, he noted. Prices charged also fell at the fastest rate since the height of the global financial crisis.

“Whilst the survey suggests the euro area has so far avoided a slide back into recession this year, a renewed downturn cannot be ruled out,” Williamson warned.

Continued uncertainty in the global economy is expected to continue to support gold though weaker physical demand for the precious metal may limit gains, analysts say.

Among other precious metals, platinum and palladium continued to recover from recent losses. Platinum for January rose as high as $1,285 a ounce on Oct. 21, its strongest in two weeks on Comex, before settling  some $2 lower at $1,283.  But, as with gold, the metal took a dive on Oct. 23 to finish $16.1 down at $1,255 a ounce on Comex.

Palladium for December also moved higher, touching close to $780 an ounce  at one point on Oct. 21 before settling at $776. Analysts say worries about Russian supplies and stockpiling are supporting the metal. Comex palladium for December settlement closed at $779.30 an ounce on Oct. 23.

Normal production resumed at Anglo American Platinum’s Rustenburg, Union and Amandelbult mines in South Africa in September, a month ahead of schedule, the producer reported this week. Anglo American was one of three producers to be hit by the five-month strike in South Africa’s platinum mining sector which ended June 24. The strike cost the company 424,000 ounces in lost production and it lost a further 108,000 ounces in the subsequent ramp-up.

Anglo American is to sell its Union mine and concentrator as part of an ongoing repositioning of the company, and according to its third quarter production report (July 1-Sept. 30), the sale process has commenced.

Lonmin, earlier this month, reported it had completed the return to full production from August onward and earlier than forecast. Tonnes mined in both August and September exceeded production reported for the same year-earlier months at 1 million and 1.04 million tonnes respectively, the company  said Oct. 8.

The mine strike cost Lonmin, Anglo American and Impala Platinum between them some R24.16 billion ($2.19 billion) in lost revenues, while employees suffered R10.74 billion ($973 million) in lost earnings, according to those companies.

Oil prices rebound

Oil prices continued to slide this week before rebounding sharply on Oct. 23 on reports that Saudi Arabia released reduced volumes of crude into the market last month, although this could not be confirmed at time of writing. However, other reports varied.

In any event, the U.S. benchmark crude contract managed to avoid a dip below $80 a barrel, slipping as low as $80.05 in early trading on Nymex  on Oct. 23 following news of a big jump in U.S. crude stocks , before trading as high as $82.37. The international benchmark, Brent North Sea crude, initially neared a low of $84 a barrel before climbing as high as $87.17 following the reports on Saudi oil supplies.

Crude output from OPEC countries surged to a 13-month high in September with production rising to 30.66 million barrels. The market is looking to OPEC’s next meeting to be held next month to see if the organization will cut output in order to shore up prices.

West Texas Intermediate (WTI) for December finished at $82.09 a barrel on Oct. 23, $1.57 up on the day. It had closed last week at $82.75. Brent crude for settlement in the same month closed $2.21 up at $86.83 a barrel, having finished last week at $84.54.

The U.S. Energy Information Administration (EIA) on Oct. 22 said the country’s crude inventories rose 7.1 million barrels in the week to Oct. 17, far more than had been expected by the market. The increase largely came on the back of lower refinery runs, with refineries across the U.S. operating at an average 86.7 percent utilization compared with 88.1 percent in the previous week, the energy body data indicated.

Crude stocks also jumped at the key Cushing, Oklahoma storage hub — the delivery point for Nymex crude futures.  EIA data showed that crude stocks at the storage hub climbed 1.7 million barrels to 95.4 million barrels in the week to Oct. 17 from the previous week.

Cocoa edges lower on West African crop prospects, weaker Asian data

Cocoa on the ICE Futures U.S. exchange in New York edged  lower this week as the market focused on higher new crop supplies from top grower Côte d’Ivoire and the world’s second biggest producer, Ghana.  Weaker cocoa processing volumes in Asia during the third quarter also weighed on prices.

Cocoa for December delivery on the ICE Futures U.S. exchange in New York settled at $3,099.50 a tonne on Oct. 23, down $40 on a week ago.  The front-month futures price had hit a 3⅟2-year high of $3,399 a tonne on Sept. 25 on fears that the Ebola virus would spread to Côte d’Ivoire and Ghana — which so far remain free of the virus — and disrupt cocoa supplies from the two countries.

Liffe cocoa in London was also lower, settling at £2,023 a tonne on Oct. 23, some $39 down on a week earlier. As with ICE cocoa, Liffe December cocoa had climbed as high £2,187 a tonne in late September on worries about Ebola.

While worries about the impact a spread of Ebola to the two top cocoa producers would have on global cocoa supplies continue to underpin the market, traders are fretting about whether demand  is weakening for the key chocolate making ingredient.

Cocoa processing volumes in Asia fell 5.9 percent to 151,643 tonnes in the three months to Sept. 30 compared with the same prior-year period, the Singapore-based Cocoa Association of Asia reported this week. The grind data, which is seen as an indicator of demand, is for cocoa processors based in Singapore, Malaysia and Indonesia.

The lower Asian grind figures mirror weaker third-quarter grind data for Europe, released last week. As reported here last week, European processing of cocoa beans was 1.1 percent lower at 327,866 tonnes from the same period in 2013, according to the Brussels-based European Cocoa Association. Bucking the trend, North American grinding rose 4.6 percent to 138,027 tons in the July-September period, the National Confectioners Association said on Oct. 16.

Some analysts believe the weaker processing data in Asia is more a response of processors cutting back purchases on account of the very high prices for cocoa in recent months rather than a real weakening demand.

Arabica coffee on ICE Futures U.S. was trading lower this week largely in response to the anticipated arrival of widespread summer rains for the main coffee-growing areas in top producer Brazil, which will help set the flowering for the new Brazilian crop (2015-2016 – Apr. 1-Mar. 31). Analysts say the short-to-medium weather forecasts are optimistic.

Arabica coffee for December settlement on ICE settled at $1.9110 cents a pound on Oct. 23, 8.5 cents down on the day and the weakest finish for the month so far. December Arabica closed last week at $2.1710 cents a pound and on Oct. 6 touched a 2⅟2 year peak  of $2.2559 a pound.

Robusta coffee on Liffe was also lower, with the November contract settling at $2,025 a tonne on Oct. 23, $129 down on last week’s finish at $2,154 a tonne.

Unlike Arabica coffee, there are few concerns about any shortage of Robusta beans.  Coffee exports from top Robusta  grower, Vietnam surged by 76 percent in the first half of October compared with the same period last year. Vietnam’s Customs data on Oct. 20 showed coffee exports from the country — which comprise mainly Robusta beans — reached 50,700 tonnes  (845,000 60-kg bags) through to Oct. 15. Much of this volume is reported to be made up of stocks carried over from the 2013-2014 season just ended. According to Reuters, traders have forecast October shipments at 100,000 tonnes.

However, Vietnam’s 2014-2015 (Oct. 1-Sept. 30) coffee crop is expected to fall to around 25 million 60 kg bags, according to the vice chairman of Vietnam’s coffee and cocoa association, VICOFA, citing a combination of ageing trees and heavy rain in some growing areas.

Meanwhile, raw sugar futures on ICE dropped to a three-week low on Oct. 23 amid a continuing weakening of the Brazilian real, and news of higher production in that country’s main Center-South cane-growing region.

March raw sugar futures dropped as low as 16.13 cents a pound on Oct. 23 before making marginal gains to finish at 16.18 cents, 0.35 cents down on the day. Early this month, ICE raw sugar had touched a two-month high of 17.20 cents a pound.

The Brazilian real this week slipped to its lowest level against the U.S. dollar since December 2008, spurring export selling by the country’s producers of the dollar-denominated commodity. The latest production data from Unica, the Brazilian sugar cane industry association, also weighed on prices. Sugar production in the Center-South region rose 4 percent in the first half of October from the previous two-week period, reaching 2.37 million tonnes, according to Unica.

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.