Top Stories: Commodities
2010-03-11 08:38:30.921 GMT
March 11 (Bloomberg) -- The following are the day's top stories on commodities:
Copper May Advance to Record on Chinese Demand, Sucden's Goldwyn Forecasts
Copper may rise to a record this year, possibly surpassing $9,000 a metric ton, driven by larger- than-expected imports by China and a revival of demand in Europe and the U.S., according to Sucden Financial Ltd. Chinese demand will be ``positive''
for the metal used in construction and the country may import an average of 200,000 metric tons a month, said Jeremy Goldwyn, who oversees business development in Asia for London-based Sucden. The West may be a ``net positive'' for copper, Goldwyn said in an interview. Copper peaked at $8,940 a ton in July 2008, two months before the collapse of Lehman Brothers Holdings Inc. helped to push the global economy into recession.
Stimulus spending by China, the largest metal user, helped to more than double prices last year and a further rally would bolster producers' profits. ``Underneath any other factors, China needs copper,'' Goldwyn said today from Shenzhen, Guangdong. ``Any commodity that China is short of is a good investment in the long term,'' said Goldwyn, who's worked in the industry for 25 years and correctly forecast in 2007 that the price would gain to a record.
El Nino May Cut Thai Rice Output, Boost Palm Oil Price as Drought Spreads
Rice production in Thailand, the world's largest exporter, may decline as drier-than-normal weather curbs yields, adding to signs that an El Nino may be hurting farm output across the region. ``Unmilled rice output in the next crop year may fall below the average production level of 31 million tons if El Nino puts off rainfall,'' Prasert Gosalvitra, head of the nation's Rice Department, said today by phone from Bangkok.
Thailand accounts for about a third of the global trade in rice. Lower production of rice from Thailand and palm oil from Malaysia caused by the dry weather may drive commodity prices higher, spurring food inflation. Asian agricultural companies including Wilmar International Ltd. may benefit from the surge, BNP Paribas SA told investors in a note today. ``We're worried that delayed rainfall will probably hurt output,'' Apichart Jongskul, secretary-general of Thailand's Office of Agricultural Economics, said today by phone. ``The impact on the next crop has yet to be evaluated,'' Apichart said.
Japan, Korea May Face Wheat Supply Disruptions From Closure of U.S. Rivers
Japan, the biggest buyer of U.S. wheat, may stockpile the grain or seek alternative supplies before the U.S. closes its largest export gateway later this year for a three-month revamp, potentially delaying shipments. Downstream lock gates on the Columbia River and the Snake River in the U.S. Pacific Northwest will be repaired from mid- December through mid-March, closing the waterways to barge traffic, said Diana Fredlund, a spokeswoman for the Army Corps of Engineers Northwestern Division in Portland, Oregon. The work will affect shipments of Western White wheat, said industry groups in Japan and South Korea. The potential supply disruption from the world's largest exporter may affect wheat prices, which have fallen 11 percent this year partly because of rising global inventories. The Columbia River is the biggest wheat and barley export gateway in the U.S. and the third-largest grain gateway in the world, according to the Web site of Pacific Northwest Waterways Association. ``Buyers are concerned that supplies of white wheat may be disrupted,'' said Park Jeong Seop, deputy general manager at the Korea Flour Mills Industrial Association. ``They are trying to work with suppliers and related parties to find ways to minimize any possible disruption.''
Cattle Speculators May Herd to Exit, Ending Rally in Prices: Chart of Day
Cattle futures may fall 6.3 percent by June as the highest prices in 16 months encourage speculators to exit positions, said Jim Stellakis, an independent analyst and former strategist at Touradji Capital Management. The CHART OF THE DAY shows net-long positions by managers of hedge and index funds were at the highest level ever in the week ended March 2, totaling 86,320 contracts on the Chicago Mercantile Exchange.
New positions on higher prices are ``late to the party,'' after cattle jumped 9.6 percent this year to 94.45 cents a pound on March 8, Stellakis said. Cattle futures may peak this month at
96 cents a pound, before dropping as low as 88 cents during May or June, based on seasonal chart patterns followed by some traders, Stellakis said. Cattle futures for April delivery closed yesterday at 93.875 cents. ``Anybody long the market between now and 96 cents should be liquidating'' their positions, Stellakis said by telephone from New York.
``Pullback toward the 89 level should be bought, if you're looking to get into the market longer term.''
Copper Drops in Shanghai, London on Concern China May Raise Interest Rates
Copper declined as inflation in China gained at the fastest pace in 16 months, fueling concern that the government and central bank may take further steps to cool the economy, potentially curbing demand for the metal. The June-delivery contract on the Shanghai Futures Exchange fell 2.2 percent to close at 59,310 yuan ($8,689) a metric ton. Copper for three-month delivery on the London Metal Exchange dropped 1 percent to $7,363 at 3:59 p.m. Shanghai time. China's consumer prices rose 2.7 percent from a year earlier and new loans exceeded forecasts, figures today showed, adding to the case for the government to cut stimulus measures. The People's Bank of China hasn't raised benchmark interest rates since December 2007, before the financial crisis deepened. ``The CPI number fueled speculation for interest rate hikes, possibly in the second quarter,'' Yang Su, an analyst at Jiangsu Suwu Futures Co., said from Nanjing today. ``That's going to damp metals demand, especially from speculators.''
China Inflation, Production Accelerate, Adding Pressure for Stimulus Exit
China's inflation reached a 16- month high, industrial output climbed and new loans exceeded forecasts, adding to the case for the government to pare back stimulus measures.
Consumer prices rose 2.7 percent in February from a year earlier, the National Bureau of Statistics said in Beijing today, compared with the 2.5 percent median estimate of 29 economists surveyed by Bloomberg News. Seasonal factors stemming from a weeklong holiday may have boosted prices.
Production rose 20.7 percent in the first two months of 2010, the most in more than five years. Premier Wen Jiabao aims to hold full-year inflation around 3 percent after banks flooded the financial system with money to drive a rebound from the global recession. Gross domestic product grew 10.7 percent last quarter and central bank Governor Zhou Xiaochuan said March 6 that anti-crisis policies, including the yuan's peg to the dollar, must end ``sooner or later.'' ``Inflation may top the 3 percent policy target by April, which is bound to trigger further monetary tightening,'' said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd. in Hong Kong. He sees benchmark interest rates increasing as early as this month.
Corn Rises for First Time in Six Days as Cold Weather Delays U.S. Planting
Corn rose for the first time in six sessions on concern that cold, wet weather last month may hamper planting work in the U.S., the world's largest exporter. Corn for May delivery rose as much as 2.5 cents, or 0.7 percent, to $3.68 a bushel on the Chicago Board of Trade and traded at $3.67 at 11 a.m. Seoul time. The price fell to a one- month low yesterday after the U.S. government said inventories before this year's harvest will be bigger than forecast. ``Corn may not fall any further as investors may start buying on concern over delayed planting,'' said Han Sung Min, a broker at Korea Exchange Bank Futures Co. in Seoul. ``The focus of the market is now moving on to planting and new crop.'' Average temperatures last month were 8 degrees Fahrenheit lower than normal and rainfall in Texas was more than double the normal average, Texas AgriLife said March 9 in a report.
Silver, Platinum Drop From Seven-Week Highs; Gold Little Changed in Asia
Silver and platinum dropped from seven-week highs after China's inflation and industrial output accelerated, adding pressure on the government to pare stimulus measures. Gold was little changed. Silver for immediate delivery lost as much as
1.2 percent to $16.8150 an ounce and was at $16.9350 at 3:02 p.m. Singapore time, while platinum dropped as much as 0.8 percent. Consumer prices in China rose 2.7 percent in February from a year ago, the National Bureau of Statistics said today, compared with the 2.5 percent median estimate of 29 economists surveyed by Bloomberg News. Silver prices reached $17.6525 an ounce, while platinum gained to $1,610.75 an ounce yesterday, the highest levels for both metals since Jan. 21, on optimism industrial demand will increase as the global economic recovery gains momentum. ``Unlike gold, silver, platinum and palladium have industrial uses so they are affected by economic growth,''
said Zhu Lv, research manager at Shanghai Tonglian Futures Co.
``Any signs of a possible slowdown in China will have an effect on prices of these metals.''
Crude Oil Falls on Concern China May End Stimulus Spending, Slow Demand
Crude oil fell on speculation Chinese demand will slow as the government may end stimulus programs amid an increase in inflation and concern that recent price gains outpaced demand growth in the U.S. Chinese consumer prices surged 2.7 percent in February, a 16-month high, increasing expectations the government may end policies to fight the global recession, which may slow economic growth. U.S. refinery utilization fell last week for the first time in five weeks to 80.7 percent of capacity, an Energy Department report said yesterday. ``This should be bearish because the Chinese government might tighten their monetary policy earlier than expected,'' said Clarence Chu, a trader with options dealers Hudson Capital Energy in Singapore. ``Speculators in China will cut down on their positions.'' Crude oil for April delivery dropped as much as 59 cents, or 0.7 percent, to $81.50 a barrel, in electronic trading on the New York Mercantile Exchange. It was at $81.59 at 3:58 p.m. Singapore time. Yesterday, the contract rose 60 cents, or 0.7 percent, to $82.09, the highest settlement since Jan. 11.
Vale Tells China of Plan to Drop Annual Iron Ore Pricing, UC361.com Says
Vale SA, the largest iron ore producer, told Chinese steelmakers it plans to drop a 40-year tradition of setting annual prices in favor of shorter contracts, according to Hu Kai, an analyst at research company UC361.com. The Rio de Janeiro-based company sent a note to major Chinese steelmakers, who haven't decided what their responses will be, Hu said from Shanghai, citing mills he didn't name. Vale will stand to win higher sales through regular pricing after spot market rates soared to more than double last year's contract agreement. Iron ore producers in Australia, the biggest exporter, will make $20 billion more a year by selling products at cash levels rather than on annual contracts, Goldman Sachs JBWere Pty said March 1. Vale is seeking to raise contract iron-ore prices by more than 90 percent for the second quarter of 2010 in negotiations with Japanese steelmakers, Nikkei English News reported, without saying where it obtained the information.
Rubber Drops as China Inflation Reaches 16-Month High, Stoking Rate Fears
Rubber declined for a third day after data showed China's inflation climbed to a 16-month high, raising concern that the nation may raise interest rates to cool the economy, curbing demand for the commodity used in tires. Rubber for August delivery on the Tokyo Commodity Exchange fell as much as 0.9 percent, reversing an earlier 1 percent gain, and settled 0.3 percent lower at 291 yen a kilogram ($3,217 a metric ton).
China's consumer prices rose 2.7 percent in February from a year ago, the National Bureau of Statistics said in Beijing today, compared with the 2.5 percent median estimate of 29 economists surveyed by Bloomberg. The nation's output grew 20.7 percent in the first two months of the year, adding to the case for the government to pare back stimulus measures. ``Concern about monetary tightening in China is the largest drag on the price of rubber,'' said Hisaaki Tasaka, an analyst at ACE Koeki Co., a commodity broker in Tokyo. China has the world's largest car market and is the biggest user of rubber.
Copper Prices May Extend Advance as Stockpiles Peak: Chart of the Day
Copper, which has more than doubled in the past year, may extend its rally and trade close to a record in 2011 as production fails to meet soaring Chinese demand, sending stockpiles tumbling. The CHART OF THE DAY shows copper prices have soared even as inventories of the metal rose to the highest since 2004. Prices typically move in an inverse relationship to stockpiles, which can indicate the level of demand. Paul Cliff, a metals and mining analyst at Nomura Holdings Inc. in London, says the correlation will resume, with stockpiles shrinking as demand in China, the largest copper-using nation, keeps growing. ``A supply shortage will push prices up as inventories fall sharply through 2010 and 2011,'' Cliff said. ``We're bullish short, medium and long term.'' Nomura predicts the copper price will average $8,818 a metric ton in 2011 as stockpiles drop to equal 37 days of global consumption. Stocks slid to the equivalent of 39 days in 2006, when the price jumped 44 percent. The bank's price forecast is the highest of 15 analyst estimates compiled by Bloomberg. Demand will exceed output by 470,000 tons in 2010 and 950,000 tons in 2011, Nomura estimates.
Hebei Steel Is Planning More Acquisitions; Says Iron Ore Talks Continue
Hebei Iron & Steel Group, China's biggest steelmaker, is planning more mergers and acquisitions in China and abroad as part of a government drive to improve the country's mills. ``We want to make further progress on mergers and acquisitions,''
Chairman Wang Yifang said at a press conference in Beijing today, without identifying targets. The state-owned company is in talks to buy Shijiazhuang Iron & Steel Co., Wang said March 7. The Chinese government wants to accelerate consolidation in the steel industry to tackle overcapacity and curb pollution as output soared to a record last year. The overcapacity is depressing prices and hurting profitability, the China Iron & Steel Association said. ``In Hebei, two-thirds of the production comes from privately owned mills,'' Wang said. ``In times of favorable market conditions, they are unwilling to be merged.'' Hebei Steel is in contact with producers outside of its province for possible deals, he said.
For the complete stories summarized here, and for more of the day's top news, see TOP
-0- Mar/11/2010 8:38 GMT
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