Commodities: Trade worries hit energy and agriculture futures

Commodity prices were off their best levels of the session in afternoon trading in the States as stocks on Wall Street struggled to find their direction.

As an aside, some market commentary was highlighting how on Monday US equity futures had traded within a range of five percentage points, a very unusual occurrence.

Overnight, the People's Bank of China had set the daily fix for China's currency, the yuan, at 6.9683 against the US dollar, which was stronger than the 6.9736 midpoint that Reuters had anticipated, helping to allay worries that trade tensions were set to escalate further over coming days.

But the US Treasury's decision, also overnight, to label China a "currency manipulator" was worrying analysts, with several saying that it spoke of rapidly rising tensions between the two economic giants and that it pointed to the risk of a further escalation in their trade war.

In response, as of 1802 BST the Bloomberg commodity index was drifting lower by 0.12% to 76.68 and the US dollar spot index was up by 0.10% to 97.6150.

Most base metals contracts on the LME ended the day higher, with three-month copper rising from $5,662 per metric tonne at the open to $5,683 per tonne at the close of trading.

"Following the sell-off yesterday, a tentative relief rally was seen across the markets today. LME metals were all higher through the morning although the momentum eased a little through the pm sessions and turnover was back to normal levels," was the take from traders at Sucden Financial.

Nonetheless, during the previous session, spot iron futures had entered into a so-called bear market after having retreated by over 20% since their most recent highs, in anticipation that a supply glut was set to ease and of weaker demand.

Precious metals also continued to find a bid, with December gold on COMEX adding 0.43% to $1,482.90/oz..

Energy and soft commodities on the other hand were mostly lower, with front month Brent giving back 0.42% to $59.56 a barrel on the ICE and September wheat on the CBoT down by 2.22% to $4.8350 a bushel.