Oil slips but wheat prices rise

Oil prices dipped on Tuesday but traders remained cautious, watching developments by hurricane Felix in the Gulf of Mexico and awaiting next week’s meeting by the Organisation of the Petroleum Exporting Countries in Vienna which is expected to see the cartel decide to keep output quotas unchanged.ICE October Brent fell 27 to $73.14 a barrel while Nymex October West Texas Intermediate slipped 7 cents to $73.97 a barrel.Indonesia, the second smallest producer in Opec, may suggest that the cartel increase output but other members, such as Qatar, have already voiced opposition to any changes in production levels.Hovis bread is to rise in price, reflecting the sharp rise in wheat prices over the past year, according to Premier Foods, the UK’s largest food producer. European wheat prices continued to trade at record levels on Tuesday with French november milling wheat futures jumping 5 per cent to €288 a tonne, the highest since the contract was launched in 1998.


Dealers are now awaiting the start of floor trading in Chicago as traders return after the Labor Day holiday on Monday. In electronic trading in Chicago, CBOT December wheat traded 30 cents higher at $8.05½ a bushel, eyeing a move towards its record $8.07¾ a tonne.

A combination of weather damage to crops in Europe and Canada, robust demand from food importing countries such as India, and the threat of export bans in countries such as Russia have propelled wheat prices to record levels.

Base metals drifted lower after softening in the previous session in very light trading volumes.

Aluminium retreated to $7,265 a tonne, under pressure after LME stocks rose significantly for a second session. LME stocks stand at their highest level since August 2004 after a rise 7,200 tonnes on Tuesday’s which followed Monday’s increase of 12,900 tonnes.

Copper retreated to $7,270 a tonne after a rise of 535 tonnes in LME stocks.

Lead fell to $2,955 a tonne after a rise of 100 tonnes in LME stocks. Lead stocks have fallen to their lowest level since march 1990 but some traders are concerned that the trend for inventory reductions may now be coming to an end.

Zinc also traded at $2,955 a tonne, under pressure from a rise of 700 tonnes in LME stocks.

Gold rose to $673.80 a troy ounce, a three-week high, supported by Monday’s news of disappointing production in South Africa which reported fa fall of 7.5 per cent to 2.04m ounces in the second quarter compared with the same period last year.

Gold demand remains robust with Turkey, the world’s third largest jewellery maker, reporting a 40 per cent jump in gold imports in the first eight months of the year.