December 17, 2009

(BN) Top Stories: Commodities

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Top Stories: Commodities
2009-12-17 09:04:39.852 GMT


Dec. 17 (Bloomberg) -- The following are the day's top stories on
commodities:

Oil, Gold, Copper Drop as Dollar Climbs to Three-Month High Against Euro
Oil, gold and copper declined as the dollar advanced to its
highest level in three months against the euro on signs the U.S.
economic recovery is gaining momentum. Wheat and soybeans reversed
gains as the U.S. currency increased against 15 out of
16 of its most-traded counterparts, advancing 0.9 percent against the
euro and 0.4 percent versus the yen. Investors turned bullish on the
dollar for the first time since March, a survey of Bloomberg users
showed. The U.S. economy is strengthening, the Federal Open Market
Committee said. ``If we see strong gains in the dollar, it will weigh
on all commodities,'' Shanghai Tonglian Futures Co. analyst Shi Hai
said in a phone interview today. Commodities, measured by the Standard
& Poor's GSCI index of 24 futures, advanced 44 percent this year by
yesterday's close as the dollar's value against six major currencies
dropped 5.3 percent. Investors bought raw materials to protect their
wealth amid the worst global recession since World War II and as
governments spent at least
$12 trillion in economic stimulus.

Palm Oil Exports From Indonesia May Climb in December Before Export Duty
Palm oil shipments from Indonesia, the biggest producer, may surge
at least 12 percent this month before the country imposes a 3 percent
export tax in January, said an official of the Indonesian Palm Oil
Association. Shipments may exceed 1.4 million metric tons, up from 1.25
million tons in November, and drop to 1.2 million tons in January,
Susanto, marketing head of the association, said in an e-mail from
Jakarta today. An increase in exports may curb a 54 percent gain this
year in the price of palm oil, used for cooking and as an alternative
fuel.
Production from Indonesia may climb to 20.7 million tons this year
from 18 million tons last year, Achmad Manggabarani, a director general
at the agriculture ministry, said Dec. 4.
``Exporters will probably boost shipments to avoid paying the tax in
January,'' Susanto said.

Gold May Drop After `Unsustainable' Rally to Record: Technical Analysis
Gold may decline to $1,098 an ounce after its ``unsustainable''
rally to a record this month, according to Royal Bank of Scotland Group
Plc. The attached chart shows bullion fell about $141 through late
April after peaking in mid-February, and slipped about $186 from March
to April last year. A drop to $1,098 ``looks the most obvious target
for the current correction,'' the bank said in a report dated Dec. 15,
referring to a series of numbers known as the Fibonacci sequence. That
would represent a 23.6 percent retracement of the metal's rally from an
October 2008 low to its record. Gold reached an all-time high of
$1,226.56 an ounce in London on Dec. 3. The precious metal is up 28
percent this year and heading for a ninth annual gain, spurred by a
plunging dollar and concern that government spending to lift economies
out of the worst global recession since World War II will spur
inflation.

Chinese Potash Contract May Be Signed by Yearend, Belarusian's Petrov
Says
Belarusian Potash Co., a trader representing Russian and
Belarusian potash producers, may sign a benchmark contract to supply
the crop nutrient to China by the end of the year, sales chief Oleg
Petrov said. The contract for 2010 ``will be important for the consumer
sentiment and may give a boost to the market,'' Petrov said in an
interview in Moscow yesterday.
He declined to forecast a price. BPC, as the trader is also called,
may move to spot sales in China in 2011 as the biggest potash market
becomes less dependent on imports because of growing local output, he
said. BPC's Chinese contract may be set at a price lower than spot
prices in Brazil, Petrov said.
German and Israeli potash suppliers cut Brazilian spot prices to $400
to $405 a metric ton, inclusive of transport costs, Fertecon, a
Tunbridge Wells, England-based adviser on fertilizers, said in a report
Dec. 15. Potash rose to a record of more than $1,000 a ton in some
parts of the world in 2008 before collapsing as farmers cut purchases
because of slumping grain prices.

Rubber Rallies to Highest Level in Almost 15 Months on Crude Oil Advance
Rubber climbed to the highest level in almost 15 months after the
Federal Reserve said the economy is strengthening, increasing
speculation demand for the commodity used in tires will increase.
Futures in Tokyo rose as much as 3.8 percent, extending yesterday's 4.2
percent rally, the best performance in four months. Prices gained as
Japan's currency fell to the lowest level in more than a week against
the dollar, making
yen- denominated contracts more attractive to investors.
``Investors are seeking to buy commodities, especially those backed by
tight fundamentals,'' Shuji Sugata, research manager at Mitsubishi
Corp. Futures Ltd. in Tokyo, said today by phone.
``Rubber may be their choice as its demand is boosted by rising car
sales in China.'' Rubber for May delivery climbed as high as 273.8 yen
per kilogram ($3,039 a metric ton), the highest level since Sept. 29,
2008, before settling at 272.1 yen on the Tokyo Commodity Exchange.
Prices rose as much as 10 yen, triggering an exchange trading circuit
breaker for a second day.

Gold Reverses Earlier Gains as Dollar's Strength Erodes Investment
Demand
Gold declined, reversing early gains, as the dollar's strength
eroded demand for the precious metal as an alternative investment. The
dollar rose against all of its 16 major counterparts before reports
forecast to show U.S. initial jobless claims slowed and a gauge of the
outlook for the world's largest economy improved for an eighth month.
The Federal Reserve said yesterday the economy is strengthening.
``In times of crisis where you don't trust paper money, where you
don't trust the financial system, then people like the physical aspect
of holding gold,'' Adrian Mowat, JPMorgan's chief Asian and emerging
markets strategist, said in a Bloomberg Television interview. ``As we
get a recovery I think gold is going to look like a very poor asset
class to own as we go into next year.'' Gold for immediate delivery
dropped as much as 1.1 percent to $1,125.40 an ounce and traded at
$1,128.20 at 3:30 p.m. in Singapore. Earlier it climbed as much as 0.4
percent to $1,141.88 an ounce, 6.9 percent off its record of $1,226.56
reached Dec. 3.

Coffee May Resume Drop After `Stumbling' at Resistance: Technical
Analysis
Robusta coffee may resume this year's decline toward $1,300 a
metric ton after approaching the high of a downward trend channel that
started in September, according to technical analysis by Newedge Group.
Robusta coffee for March delivery is ``stumbling at resistance at
$1,425 and it may very well be more of a waiting game as the upper
channel line declines towards prices,'' Veronique Lashinski, an analyst
in Chicago, said in a Dec. 15 report. ``A close below $1,385 would
point to a decline toward $1,350 and to an immediate resumption of the
decline.'' Robusta futures have dropped 11 percent this year, and on
June 25 fell to $1,250 a ton, the lowest level since the 10-ton
contract started trading in January 2008. Vietnam is the largest grower
of the beans. The five-ton contract, delisted after January this year,
fell to that price in July 2006. The March contract closed at $1,406 a
ton in London yesterday.

China Seeking Assistance From WTO to Resolve U.S. Cotton Subsidy Dispute
China, the world's largest cotton importer, will try to resolve
the issue of U.S. cotton subsidies through the World Trade
Organization, the Ministry of Commerce said yesterday.
``The U.S. massively subsidizes its cotton, violating fair trade and
fair competition, especially affecting the Chinese cotton farmers'
interests,'' Yao Jian, spokesman at the ministry, said in a regular
media briefing. ``China will actively seek resolution on the issue
under the WTO framework.'' China has about 140 million people involved
in cotton production and 20 million workers in the textile industry,
Yao said. U.S. supplies account for almost a third of the nation's
cotton imports, which increased almost 12-fold in six years to reach
2.11 million metric tons in 2008, he said.
Last month, Brazil was cleared by the Geneva-based World Trade
Organization to impose $294.7 million in trade sanctions because of
U.S. cotton subsidies. At the time, U.S. officials said the WTO's
rulings would be complied with and they doubted Brazil would need to
exercise the sanctions.

Crude Oil Declines as Dollar Rises to Three-Month High Against the Euro
Crude oil fell as the dollar strengthened against the euro,
limiting the appeal of commodities as a currency hedge. Crude snapped
two days of gains as the dollar rose to a three-month high against the
euro after the U.S. Federal Reserve said yesterday the economy is
strengthening and the deterioration in the labor market is abating. Oil
rose the most in a month yesterday after the Energy Department said
U.S. crude inventories declined to the lowest since the week ended Jan.
9.
``It's a bit of the dollar'' that's causing the decline in prices
today, Thina Saltvedt, a commodities analyst at Nordea Bank AB in Oslo,
said by telephone. ``Demand, although improving, is still sluggish.''
Crude oil for January delivery fell as much as 54 cents, or 0.7
percent, to $72.12 a barrel in electronic trading on the New York
Mercantile Exchange. It was at $72.15 a barrel at 8:56 a.m. London
time.

Wheat, Corn Decline as Dollar's Gains May Reduce Demand for U.S. Harvest
Wheat, rice, corn and soybeans declined on speculation that the
dollar's strength may erode demand for supplies from the U.S. The
dollar climbed to a three-month high against a basket of six major
currencies as signs the U.S. recovery is gaining momentum boosted the
attraction of the greenback. Wheat prices in Chicago have lost 9
percent this month, while the dollar index has risen 3 percent.
``Abundant global supplies and a lack of interest in uncompetitively
priced U.S. exports will continue to limit the upside for Chicago wheat
prices,'' said Toby Hassall, a research analyst at CWA Global Markets
Pty in Sydney. Wheat for March delivery dropped 0.7 percent to $5.3375
a bushel in electronic trading on the Chicago Board of Trade at
2:42 p.m. in Tokyo after earlier trading as high as $5.3925.

Ship Scrapping to Slow From 23-Year Peak on Freight Rates: Chart of Day
Ship owners are likely to scrap fewer commodity vessels as this
year's fourfold gain in freight rates reduces the attraction of sending
older ships to the breakers' yard, according to Sverre Bjorn Svenning,
an analyst at Fearnley Consultants AS in Oslo. The CHART OF THE DAY
shows scrapping in millions of deadweight tons is at a 23-year high,
based on data from shipbroker Simpson Spence & Young and Lloyd's
Register-Fairplay. The Baltic Dry Index, a measure of shipping costs
for commodities in red, is likely to decline next year as fewer ships
are broken up, Svenning said. The index advanced to a record in May
last year before slumping 94 percent by December amid the worst global
recession since World War II.
That drove freight rates on some vessels below operating costs,
spurring more scrapping. The gauge jumped 349 percent this year, partly
as China, the world's biggest steelmaker, imported record amounts of
iron ore and coal. ``As long as the freight market is at the level you
see today, there will be hardly any scrapping at all,'' Svenning said
by phone Dec. 15. The global dry bulk fleet will expand 8 percent to 10
percent next year, ``much bigger than the demand growth and as a result
rates will go down,'' he said.

For the complete stories summarized here, and for more of the day's
top news, see TOP <Go>.

-0- Dec/17/2009 9:04 GMT

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