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Palladium falls most in nine months

As SA concerns ebb.
Palladium futures tumbled the most in nine months amid signs of progress in the labor dispute in South Africa, the world’s second-biggest producer. Platinum headed for the biggest drop in 12 weeks.
On April 18, top South African mining companies increased a pay offer to workers as a strike entered the 13th week. The main union will meet producers tomorrow to discuss the proposal. The U.S. and its European allies urged Russia, the top source of palladium, to help calm the Ukraine crisis after four-party talks produced an accord aimed at easing a standoff.

A resolution of the strike will help ease concerns that supplies will tighten. Demand is set to top production by 783,000 ounces this year, according to Barclays Plc. Through April 17, palladium jumped 12 percent this year, the biggest increase to start a year since 2010. Russia and South Africaaccounted for 78 percent of global output in 2013, Morgan Stanley says.

“People are hoping that the strike will end soon,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. “Also, there are no disruptions of supplies from Russia as yet.”

On the New York Mercantile Exchange, palladium futures for June delivery tumbled 3.8 percent to $776.35 an ounce at 12:51 p.m. A close at that price would mark the biggest drop for a most-active contract since June 26.

Trading was 18 percent higher than the average for the past 100 days for this time, according to data compiled by Bloomberg.

Hedge funds

In the week ended April 15, hedge funds increased bullish bets on the metal by 5.5 percent to 21,021 contracts, the highest since late November, government data showed on April 18.

Holdings in global exchange-traded funds backed by the metal have climbed 14 percent this year to 76.67 metric tons.

U.S. Vice President Joe Biden arrived today in Kiev to offer support for Ukraine as the administration weighs the imposition of economic sanctions on Russia, according to an official who briefed reporters on the plane.

Platinum futures for April delivery fell 2 percent to $1,400.70 an ounce on the Nymex, the biggest drop since Jan. 24.

“We are seeing the market react to the news out of South Africa,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “While prices may head lower temporarily, the overall fundamentals remain bullish.”

In South Africa, the Association of Mineworkers and Construction Union, which has led more than 70,000 people, will meet with mining companies tomorrow.

Anglo American Platinum Ltd. and Impala Platinum Holdings Ltd., the two largest producers, said on April 18 they will boost monthly wages of the lowest-paid underground workers. Lonmin Plc said it will offer a similar increase.

©2014 Bloomberg News

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