Oil, wheat, corn and metals took a hammering Friday night in Europe and the US after the weak American jobs figures for May and the outbreak of more concerns about the financial health of Europe.
The news saw the US dollar rise sharply, especially against the euro (and the Aussie dollar).
Gold rose, as it would given the flow of news, but if the US dollar remains high today, it will be pressured to reverse Friday’s gains.
Crude oil futures prices fell 4.1% Friday, the largest single-day drop since early February after the weak jobs report which showed a net 21,000 new jobs were created by private employers last month.
Nymex July crude fell $US3.10, to $US71.51 a barrel on the New York Mercantile Exchange.
Not helping were the new worries about Europe (Hungary) and a French bank.
That saw the US dollar rise as investors once again sought safe havens in American assets.
That pushed the euro down under $US1.20 for the first time in four years, trading down to around $US1.19.
So Friday’s losses wiped out gains oil had achieved on the shortened holiday week – prices lost 3.3%.
The Labor Department reported the nation’s economy added 431,000 jobs in May, but Census hiring inflated the numbers, masking weakness in private-sector hiring.
Economists had expected an increase of about half a million jobs on the month.
Despite the gloom, Goldman Sachs analysts said in a report Friday they believe oil markets are "oversold" as they forecast prices in a range of $US85 to $US95 a barrel in the second half of the year.
Base metals fell again for a fourth day on Friday, with copper hitting its lowest price since October 2009, after the disappointing US jobs figures.
Not helping copper was gloomy forecasts from two major producers, Freeport and Codelco, that China’s moves to cool its economy, would cool demand for copper.
In London, zinc plunged to a 10-month low, nickel and tin hit their lowest levels in nearly four months, aluminum sank to a near eight-month low, and lead sank to its lowest in almost a year.
Comex July copper in New York fell 12.70 cents, or 4.3%, to settle at $US2.8190 per lb, the lowest level since October 13.
On the London Metal Exchange, three-month copper finished at $US6,280 a tonne in official dealings and fell to a late-session low at $US6,235 per tonne, the lowest since October 19.
Driving the price lower (and those other commodities) was the sharp rise in the value of the US dollar, especially against the greenback.
The euro’s fall to $US1.19 after the jobs report and on the poor news from Europe triggered a flood of selling in commodity markets.
Fears about the strength of Chinese demand undermined copper in particular.
(But many dealers have forgotten that China starts buying heavily when it sees a major weakness in copper prices, as we have seen with the 20% fall from the highs last October.)
Perhaps this is why LME copper stocks are now at their lowest since December at 473,000 tonnes and down to six and a half-year highs at 555,075 tonnes in mid February.
Aluminum in London ended $US1,881, down from $US1,955, having hit its lowest since mid-October at $US1,880.
Zinc closed down at $US1,641 a tonne, down from $US1,740, having hit its lowest since late July at $US1,646.
Tin finished at $US16,005, down from $US17,650 after sinking nearly 10% to $US16,000, the lowest it has been since February.
Nickel continued to weaken, falling to $US17,950, down from $US18,700, having hit a near four-month low of $US17,975.
Lead saw a similar story, ending at $US1,607, down from $US1,645, after hitting a one year low at $US1,591.
Lead stocks are now at their highest level since late 2002 and some buyers are now preferring to leave their metal in stockpiles and are not taking delivery.
Comex August gold rose $US7.70, or 0.6%, to $US1,217.70 on Friday.
That left the metal up 0.3% for the week and ended the selling that started Wednesday.
Wheat fell to a three-year low, corn touched the lowest price since October and soybeans dropped sharply in Chicago on Friday.
July wheat futures fell 6c, or 1.4%, to $US4.3575 a bushel on the Chicago Board of Trade, after touching $US4.35, the lowest level for the most active futures since April 2007.
The price fell nearly 5% last week.
July corn futures dropped almost 10c to $US3.40 a bushel in Chicago, after touching $US3.3975, the lowest level since last October. Prices fell 5.3 % last week.
July soybean futures fell 20c, or 2.1%, to $US9.35 a bushel .
The price has fallen for six straight weeks, down 11%, on forecasts that Brazil and Argentina, the biggest exporters after the US will lift their combined output by 36% to a record.
