Commodities: European metals brave Chinese selloff, corn and oil futures fall

The European metals market was seen weathering a selloff in China early on Monday, while oil benchmarks continued to fall at the start of the week.

Earlier in the session, the Shanghai Composite Index plunged 8.47%; its worst performance in three weeks. The drop was due to the release of data which showed industrial profits fell 0.3% in June. Last Friday, Markit's China manufacturing PMI published fell to 48.2 in July from 49.4 in June. The figure was significantly weaker than expectations of 49.6 points.

While metals tumbled in Asia, selected contracts bounced back into green in late afternoon in Europe. Past the midway point in trading on the London Metal Exchange, three-month delivery contracts of primary aluminium (up 0.2%), and tin (up 3.0%) were largely in the green.

However, copper (down 0.8%), lead (down 0.8%), nickel (down 2.0%) and zinc (down 0.8%) were in negative territory. Meanwhile, the precious metals market got a bit of respite with gold on the up, even though the road ahead remained rocky for the yellow metal.

At 1541 BST, COMEX gold for December delivery was up 0.96% or $10.40 at $1095.90 an ounce, while spot gold was up 0.14% or $1.55 at $1,100.66 an ounce. Concurrently, COMEX silver for September delivery was up 1.12% or 0.16% at $14.65 an ounce, while spot platinum was down 0.22% or $2.17 at $985.53 an ounce.

Kelly-Ann Kearsey, dealing manager at GoldMoney, said, “A conclusion to the Grexit situation and indications of rising inflation in the US, and thus an increased likelihood of a rate hike, has dampened gold’s safe haven status and brought out a riskier appetite among investors.”

“Moving forward, the US driving season and summer holidays in many markets, should indicate a quiet period, but one where any fairly large movements could have a significant effect on the markets. Silver was also on the selling list, although the gold/silver ratio has improved slightly.”

Oversupply issues and fears of a Chinese economic slowdown continue to hound oil markets The Brent front month futures contract for September delivery was down 1.94% or $1.06 at $53.56 a barrel, while the WTI shed 1.27% or 61 cents to $47.53.

Finally, the agricultural commodities market was largely in negative territory with CBOT wheat (down 0.78%), ICE cotton (down 0.76%) and CME live cattle (down 0.36%) trading lower and ICE cocoa coming in broadly flat.

However, the CBOT corn futures contract was trading sharply lower shedding 2.42% or $9.75 to $393 a bushel on favourable weather expectations. Analysts said the market was reacting to forecasts that conducive weather would boost corn production stateside during a key period for the crop.