Friday August 06, 2010 04:16:22 AM GMT
* US wheat posts biggest daily percentage loss in 14 mos
* Weak US jobs data prompts fears about oil, metal demand
* Sugar, coffee, cocoa post big weekly percentage losses
* Due next week: July CPI, retail sales on Friday.
By Carole Vaporean
NEW YORK, Aug 6 (Reuters) – U.S. commodity markets were mostly lower by week’s end, with grains, oil, sugar and cocoa posting sizable losses on Friday after a weaker-than-expected U.S. employment report for July prompted investors to unload some holdings on demand worries.
Grains, sugar, cocoa and coffee tumbled as investors grabbed profits after steep advances earlier in the week.
The RJ/CRB index of 19 commodities, a global benchmark for the sector, was down 1.066 percent, or 2.96 points, at 274.71. It was the biggest one-day percentage loss since June 29 for the index. (Graphic: http://link.reuters.com/kyv37m)
Prices of U.S. crude oil futures fell for a third straight session and copper prices closed down for a second-straight day, after disappointing employment data in the United States underscored concerns about a slowing economic recovery.
Gold hit a three-week high, gaining 1 percent, after a bigger-than-expected decline in U.S. nonfarm payrolls increased the precious metal’s appeal as a safe-haven investment.
U.S. non-farm payrolls fell for a second straight month in July as more temporary census jobs ended, causing twice as many jobs to be shed as expected. Private hiring rose, but less than expected, pointing to an anemic economic recovery.
Some analysts noted that the tepid July employment readings were an improvement over June’s figures and continued to show U.S. economic recovery, slow though it may be.
“It’s recovery nonetheless. And even today’s employment report doesn’t derail the global growth theme,” said Adam Sarhan, chief executive of Sarhan Capital in New York.
Moreover, the weak labor market report proved bearish for the dollar, helping to underpin dollar-denominated commodities by making them more attractive in overseas markets.
“The recovery theme is what’s driving commodities higher, along with the dollar, which has fallen precipitously in the last 5 or 6 weeks,” said Sarhan.
Once the dust settled, some analysts said investors who sold off commodities on Friday, may be back buying next week.
Though copper ended lower, its declines paled in comparison to the heftier declines in other markets. And while oil prices fell they still managed to finish stronger on the week.
Wheat markets tumbled their daily limit as Investors took profits a day after prices surged more than 8 percent on panic buying when Russia suspended grain shipments because of the worst drought in a century.
In the the biggest daily percentage loss in 14 months, Chicago Board of Trade (CBOT) September wheat fell the maximum 60 cents, over 7 percent, a day after the maximum daily gain. Still, the nearby contract notched a weekly gain of nearly 10 percent.
Soft U.S. commodities, sugar, coffee, cocoa all posted large losses for the week. Cocoa crumbled more than 4 percent as investors liquidated as word spread that analyst Hans Kilian revised cocoa output estimates upward in top grower Ivory Coast.
Sugar was slightly lower at the close, but the contract was down 6.8 percent in its biggest weekly loss since May 30. Arabica coffee futures also fell in heavy volume, as investors of both commodities liquidated long positions in markets. The spot coffee contract finished the 5 percent lower, its biggest weekly loss since Jan. 31. (Reporting by Carole Vaporean; Editing by David Gregorio)