January 25, 2010

Top Stories: Commodities

Jan. 25 (Bloomberg) -- The following are the day's top stories
on commodities:

Platinum Overtaking Gold as Metal of Choice With Rebounding Sales of
Even after a record 57 percent rally last year, platinum is
cheap relative to gold, signaling more gains as demand grows
from carmakers and exchange-traded funds. An ounce of platinum
buys 1.42 ounces of gold, down 42 percent from the record 2.43
ounces in 2001 and 23 percent less than the 10-year average,
data compiled by Bloomberg show. Automakers, the biggest
buyers, will expand output 20 percent this year, said Evan
Smith, who helps manage $2 billion at U.S. Global Investors.
Hedge funds raised their bets 163 percent in 2009, about twice
gold's increase. ETF Securities Ltd. funds lifted holdings to a
record 594,465 ounces. ``We are long platinum and short gold,''
said Jonathan Barratt, the Sydney-based managing director with
Commodity Broking Services Pty, who predicted platinum's rally
in September. ``Gold remains under pressure. As inflation moves
lower and the dollar goes higher, gold isn't as solid.'' Bank
of America-Merrill Lynch strategist Michael Widmer raised his
forecast for this year by 35 percent to an average of $1,750
and predicted $2,000 for 2011. Standard Chartered Plc forecast
platinum will be one of the year's best commodities. Prices may
jump 55 percent to a record $2,400 by mid-year, said Joerg Ceh,
head of commodity trading at Landesbank Baden- Wuerttemberg in
Stuttgart, Germany's biggest state-owned lender.

Copper Declines as Asia Stocks Drop, Concern Obama Plan Will Curb
Copper fell as Asian stocks dropped for a sixth day on
concern U.S. President Barack Obama's plan to limit the size of
financial institutions may curb trading. Aluminum was little
changed and zinc increased. Three-month copper on the London
Metal Exchange fell as much as 1 percent to $7,318 a metric ton
and traded at $7,355 at 3:40 p.m. in Singapore. The price
declined as China may take further steps to slow growth after
its economy expanded 10.7 percent in the fourth quarter. China
and the U.S. are the world's two biggest users. China's
government has already moved to rein in record lending that
contributed to copper more than doubling last year. The central
bank said last week it will limit credit expansion in 2010 as
the prospect of resurgent inflation and asset bubbles grows.
Copper is often taken as an indicator for the world economy as
it is used in construction and automobiles. ``Both the U.S. and
China introduced policies that may derail the global economic
recovery,'' Tan Wentao, an analyst at HNA Topwin Futures Co.,
said from Shanghai today.

Chinese Steelmakers Face Iron Ore Price Squeeze as ArcelorMittal Revives
Chinese steelmakers, the world's largest buyers of iron
ore, face escalating costs for the steelmaking ingredient as
global rivals ArcelorMittal and Posco increase output to feed
resurgent demand in developed economies. Contract prices may
climb 31 percent to the second-highest on record for the year
starting April 1, according to the mean estimate of 17 analysts
surveyed by Bloomberg. That compares with the 14 percent gain
forecast in October. Nomura Inc. and Bank of America Merrill
Lynch expect a 50 percent jump. The demand revival will benefit
BHP Billiton Ltd., Rio Tinto Group and Vale SA, the three
largest suppliers of iron ore. The global recession forced
miners to slash prices by 33 percent in 2009, the first
reduction in seven years. ``The big mills in China have been
driving the price, but now capacity outside China is picking
up,'' Colin Hamilton, a Macquarie Securities Group analyst in
London, said by phone. ``There is pressure on producers to
deliver into Europe and elsewhere, which is exacerbating the

Gold Snaps Three-Day Decline as Sliding Dollar May Revive Investor
Gold climbed for the first time in four days on speculation
the dollar's decline will revive demand for the precious metal
as an alternative asset. The dollar is poised to weaken before
a report today economists said will show sales of existing U.S.
homes fell in December. Asian stocks slid for a sixth day after
uncertainty over Ben S. Bernanke's confirmation for another
term as head of the U.S. Federal Reserve weighed on financial
shares. ``I'm bullish on gold'' this week, said Gavin Wendt,
senior resource analyst at Mine Life Pty in Syndey. ``In an
economic environment full of uncertainty with respect to the
outlook for U.S. economic growth, gold remains the one constant
whose luster in not only untarnished, but in fact greatly
enhanced.'' Gold for immediate delivery rose 0.6 percent to
$1,099.10 an ounce at 1:42 p.m. in Singapore. The metal, which
touched an all-time high of $1,226.56 last month, slumped to a
one-month low of $1,081.95 an ounce on Jan. 22.

Copper May Reach $10,000 This Year on Chinese Demand, HFZ Capital Says
Copper may rise to a record $10,000 a metric ton this year,
driven by industrial demand in China and rising commodity
investments to hedge inflation, said Shen Haihua, an investment
manager at HFZ Capital Management Ltd. Refined copper
consumption in China, the world's largest user, may rise 8
percent to 6.99 million metric tons in 2010 from last year, as
the economy accelerates, Shen said at a forum in Shanghai
today. Hong Kong-based HFZ Capital was set up in 2008 by RK
Capital Management LLP. Copper in 2009 had its biggest annual
increase in more than two decades as China boosted imports to a
record on stimulus spending, state stockpiling and a lack of
scrap. Economic growth accelerated to the quickest pace since
2007 in the fourth quarter, capping Premier Wen Jiabao's
success in shielding the nation from the first global recession
since World War II. China's net imports of refined copper may
be 2.19 million tons this year, down 30 percent from a year
ago, Shen said. The amount is still ``enough to be a key reason
to drive copper to $10,000'' amid an inflationary global
environment, he said. Shen said the contract may trade in a
range between $6,000 and $10,000 a ton.

Steel Prices in China Drop the Most in Four Months on Record Inventories
Steel prices in China, the world's biggest producer of the
metal, dropped the most in four months last week as inventories
piled up and concerns grew that the government may curb
lending. Inventories of steel products, including holdings by
traders, producers and end users, are estimated to exceed 50
million metric tons, setting a record, said Ma Haitian, an
analyst with Beijing Antaike Information Development Co. That's
compared with an estimated 18 million tons a year ago, he said.
``Some may trim their inventories at discounted prices to
collect money before the Chinese New Year'' holiday in
February, Ma said. ``Speculation of interest rate hikes and
other tightening measures also added to concerns about capital
availability in the market.'' China's growth rate in the fourth
quarter accelerated at the fastest pace since 2007, as the
nation's $586 billion stimulus spending and record lending
stoked car and property sales. That's raised concerns the
government may increase interest rates or take other measures
to curb inflation and limit asset bubbles.

South Korea's Lee Seeks Singh Help for $12 Billion Posco India Steel
South Korea's President Lee Myung Bak will ask the Indian
government for support to clear the way for Posco's $12 billion
steel project in the South Asian country that's been delayed
for about three years. Lee, who will attend India's Republic
Day celebrations on Jan. 26, is seeking Prime Minister Manmohan
Singh's ``continued interest and support'' for the project, he
said in a written interview with the Times of India newspaper,
according to a Korean-language transcript issued by Lee's
office yesterday. Posco's project in the eastern state of
Orissa, potentially the single-biggest overseas investment in
India, was announced in 2005 and is delayed pending mining
permits and land clearance. Plans by ArcelorMittal, the world's
largest steelmaker, to build a pair of $10 billion plants in
Orissa and neighboring Jharkhand have also been stalled because
of land purchases. ``The India project is crucial for Posco as
it will provide cheap raw materials to the steelmaker and
expand Posco's output substantially,'' said James Ha, an
analyst at KTB Securities Co.

Corn Rises on Signs Recent Price Slump Boosting U.S. Sales; Soybeans
Corn advanced on speculation recent declines are attracting
investors and importers as export sales jumped from the U.S.,
the world's biggest shipper. Wheat and soybeans also gained.
Corn climbed as much as 1 percent to $3.6825 a bushel in
after-hours trading on the Chicago Board of Trade, after losing
12 percent this year through Jan. 22. Futures for
March-delivery were at $3.6725 a bushel, up 0.6 percent at 2
p.m. in Singapore. U.S. exporters sold 1.61 million metric tons
of corn in the week ended Jan. 14, up from 327,286 tons a week
earlier, the U.S. Department of Agriculture said in a report
released Jan. 22. ``Corn demand has started to improve with the
USDA indicating big export sales,'' Luke Mathews, an
agricultural commodity strategist at Commonwealth Bank of
Australia, said in a report published today.

Chinalco to Step Up Pace of Overseas Resource Acquisition and
Aluminum Corp. of China, the country's largest maker of the
metal, will speed up overseas resource acquisition and
exploration this year as one of its key objectives for 2010,
Chairman Xiong Weiping said. Chinalco, as the Beijing-based
company is known, will ``utilize all its resources and
energy,'' to speed up acquisitions, Xiong said in a speech to
staff posted on the company's Web site today. It also wants to
expand output of other metals, Xiong said. Chinese companies
spent more than $30 billion buying up mines and oil deposits
globally last year, taking advantage of the global recession to
add resources to feed domestic economic growth. Chinalco's
offer to invest $19.5 billion in Rio Tinto Group was rebuffed
last year by the world's second-largest iron ore exporter.
Chinalco posted a profit in the second half, recovering from a
loss in August, the company said in the statement today,
without giving a figure. Sales rose to 142 billion yuan ($21
billion) in 2009, it said. That's 10 percent higher than last
year's 128.7 billion yuan.

OPEC Ignores Production Quotas as Investors Purchase Oil: Chart of the
OPEC members likely will keep increasing production in the
months ahead without triggering a price drop as investors pour
money into commodity markets. The CHART OF THE DAY shows that
output by the Organization of Petroleum Exporting Countries
grew 4.7 percent to 28.965 million barrels a day in the last
nine months of 2009 as oil rose 60 percent to $79.36 a barrel.
The sliding dollar has prompted investors to purchase raw
materials such as oil because they offered better returns than
stocks or bonds. ``Oil has become a financial asset, fulfilling
the role once played by precious metals, treasuries and
currencies, which leaves OPEC out of the loop,'' said Michael
Fitzpatrick, vice president of energy at MF Global in New York.
``They will continue to pump additional oil and reap the
benefits.'' Speculative net-long positions, or the difference
between orders to buy and sell oil futures, rose 25 percent to
a record 135,669 contracts in the week ended Jan. 12, according
to a report from the U.S. Commodity Futures Trading Commission.
A long position is a bet that prices will rise.

Cattle in Australia Feedlots Increase on Dry Weather, Falling Grain
Cattle numbers in feedlots in Australia, the world's
second-largest beef exporter, rose 3.7 percent in the December
quarter as pastures wilted on dry weather, and grain and cattle
prices fell in southern states. The herd in feedlots gained to
770,223 at the end of December compared with 743,052 three
months earlier, the Australian Lot Feeders Association said in
a statement. Difficult trading conditions may curb further
increases in the ``short-term,'' said Jim Cudmore, president of
the group. Dry weather last year dried pastures and drove
cattle prices lower as farmers reduced grass-fed herds. New
South Wales, the second-largest feedlot state, was 82 percent
drought- affected, Primary Industries Minister Steve Whan said
in a Jan. 12 statement. Feedlot numbers also gained as grain
prices declined 6 percent on average during the December
quarter compared with the previous three months, the industry
group said. Cattle numbers on feed rose in New South Wales,
Victoria, South Australia and Western Australia. Numbers fell
1.8 percent in Queensland to 431,695, the statement said.

China to Increase Sugar Output to 17 Million Tons by 2015 to Meet Demand
China, the world's third-biggest producer of sugar, plans
to raise output to 17 million metric tons by 2015, the Ministry
of Agriculture said. The country will boost the area planted to
sugar cane to 26 million mu (1.73 million hectares) and sugar
beet to 3 million mu, the ministry said in a conference in
Nanning on Jan. 22. Sugar cane output will rise to 130 million
tons and beet 8.5 million tons, the ministry said. Production
may fall to 12 million tons in the 2009-2010 season from 12.43
million tons a year earlier, the China Sugar Association said
in November. Local prices have risen despite the government
selling stockpiles, illustrating that the market remains tight,
Yang Yunsheng, vice chairman of the Yunnan Sugar Association,
said Jan. 22.

Raw, Refined Sugar May Rise This Week in New York, London, Survey Shows
Raw-sugar futures and refined-sugar contracts may climb
this week on signs that a global supply shortfall will widen,
according to a survey. Six out of 10 traders, analysts and
brokers surveyed last week forecast that raw sugar traded in
New York would advance. Four predicted a drop. Raw sugar gained
4.2 percent to 28.78 cents a pound last week. Five of 10
respondents said white sugar traded in London would gain, and
three said the price would retreat. Two forecast it would be
little changed. White, or refined, sugar climbed 3.2 percent to
$747 a metric ton last week. Seven of 10 said refined sugar's
premium over raw sweetener would widen, two said it would
narrow and one said the gap would be little changed.

Indian Temple Trust to Deposit Excess Gold in Banks, Economic Times Says
Tirumala Tirupati Devasthanams, India's largest temple
trust, may deposit its excess gold with state-run banks this
year, the Economic Times reported, citing government, bank and
temple officials it didn't identify. The trust deposits gold
each time the quantity offered by devotees reaches 500
kilograms (1,102 pounds), the report said. Last year, 500
kilograms was placed with Indian Overseas Bank at 1.6 percent
annual interest for three years, the report said. The trust has
received quotes on rates offered by four-five banks for placing
bullion in interest-bearing deposit plans. The State Bank of
India and Corporation Bank were among lenders that offered such
plans in the past, the report said. About 50,000 devotees place
their offerings, including gold jewelry and coins, every day at
the feet of the presiding deity in Tirupati, the report said.
As much as 800 kilograms of gold is donated to the trust
annually, the report said.


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