Thursday, September 15, 2011

20110915 1042 Global Commodities Related News.

Corn (Source: CME)
US corn futures end slightly higher, rebounding from early losses amid supply worries. Forecasts calling for freezing temperatures in the northwest corn belt underpinned the market, as traders say supplies are too tight to lose some of this year's crop to a cold snap. A rebound in equities added to the support, as corn shook off early losses. Questions about demand at historically high prices limited the upside, traders say. Sep CBOT corn end up 3 3/4c to $7.13 a bushel while Dec, the most active contract, ends up 1 1/4c to $7.24 1/4.

Wheat (Source: CME)
US wheat futures end mixed, with CBOT wheat rebounding slightly after falling to a one-month low Tuesday. Prices were supported by a rebound in equities. Kansas City wheat sagged, however, on forecasts calling for rain in the southern US Plains, which will aid planting in the drought-ravaged reason. Poor export demand has loomed over the market, as buyers choose Russian wheat instead of US. Dec CBOT wheat ends up 2 1/2c to $7.04 1/2 per bushel, while KCBT Dec wheat ends up 10 1/2c to $7.92 and MGEX Dec wheat down 12c to $8.64 3/4.

Rice (Source: CME)
US rice futures close sharply lower, extending a retreat from a nearly three-year high. Traders were taking profits following the rally earlier this week. "It seems like today people just kind of tossed in the towel," says Jack Scoville of Price Futures Group, adding he attributed most of the losses to selling by speculative traders. CBOT November rice drops 29c, or 1.6%, to $17.79 1/2/hundredweight.

US corn, wheat tick higher after selloff; soy dips
SINGAPORE, Sept 14 (Reuters) - Chicago grains edged higher , with corn recovering from a 4-week low and wheat rising 0.3 percent after sliding to its lowest in more than a month in the last session, amid concerns over declining demand for U.S. supplies.
"Yesterday, we saw a sharp selloff in corn and wheat and in early trading for today there is some bargain hunting as corn supplies are tight," said Lynette Tan, an analyst with Phillip Futures in Singapore.

Drought could hit Ukraine '12 grain crop
KIEV, Sept 14 (Reuters) - Lack of moisture in soil across Ukraine could affect the yield of the next year's winter grain crops and reduce the harvest, a senior weather forecaster said on Wednesday as farms started the 2012 winter grain sowing.
"The situation is not critical but we have enough ground for concerns," Tetyana Adamenko, the head of the agricultural department of Ukraine's meteorological centre, told Reuters in an interview.

Canada farm department adjusts crop estimates
WINNIPEG, Manitoba, Sept 13 (Reuters) - Canada's farm department raised its harvest forecast for wheat and lowered it for canola to match Aug. 24 forecasts by Statistics Canada.
Agriculture Canada released its grain and oilseed outlook, which is based on analysis not a farmer survey, on Tuesday.

Canadian Prairie frost seen as minor crop threat
WINNIPEG, Manitoba, Sept 13 (Reuters) - The Canadian Prairies' first widespread frost of the growing season will probably do minimal damage to cereal and canola crops, with the harvest well ahead of the usual pace.
Environment Canada is forecasting freezing temperatures for Tuesday night in southern and central Saskatchewan -- the top crop-growing province -- ranging from minus 2 degrees C (28.4 Fahrenheit) at Kindersley, North Battleford and Maple Creek down to minus 5 degrees C (23 Fahrenheit) in Melfort and Yorkton.

Farm body lifts French soft wheat crop estimate
PARIS, Sept 13 (Reuters) - French farm office FranceAgriMer lifted its estimate of France's soft wheat crop this year to 33.4 million tonnes against 33.3 million seen last month and said crop quality was satisfactory.
Compared with last season, the French soft wheat harvest would still be down by 6.4 percent after a severe drought hit plant development in the spring, it said.

Pakistan rains cause little damage to rice, sugarcane
ISLAMABAD, Sept 13 (Reuters) - Heavy monsoon rains in Pakistan's southern Sindh province have caused only minor damage to the sugarcane and rice crops, officials said on Tuesday, though weeks of heavy downpour have already destroyed about 13 percent of the cotton crop.    
The floods have made about 280,000 homeless, and ruined crops over 1.7 million acres of land in Sindh, where the cotton crop has been hit the hardest, with an estimated loss of up to two million bales.

UK Wheat Harvest More Resilient Than Hoped - NFU (Source: CME)
The U.K.'s wheat harvest in 2011-12 is expected to come in only 1.5% below the average of recent years despite the impact of drought early in the season, the National Farmers' Union said. Preliminary results from the NFU's survey of U.K. farmers indicated that wheat yields will come in at around 7.5 metric tons a hectare--only slightly below the 7.8 ton/hectare average for the past five years. With the cropping area up 3% this crop year, wheat production is expected to come in only 189,000 tons below the average since 2006-07 at around 13.64 million tons, the survey, which will be completed later this month, showed. Ian Backhouse, the NFU's combinable crops chairman, said the fall was due to dry conditions during the crop formation period earlier this year. The Environment Agency declared drought across several counties in the southeast of England, including in East Anglia, which grows 17% of the U.K.'s wheat.
"Survey responses have pointed to a large variability in yields," Backhouse said. "Where sufficient rain fell in June and July onto later maturing crops, yields have been exceptional. However, towards the latter part of harvest there was more variability in quality." Full U.K. yield results for wheat, barley and oilseed rape crops will be released later this month.

India Foodgrain Output Likely To Cross Target - Minister (Source: CME)
India's foodgrain output will likely cross the government's target of an all-time high of 245 million metric tons this crop year with above average monsoon rains boosting the production prospects of both wheat and rice, Farm Minister Sharad Pawar said. The output of rice during the main summer season is estimated to rise by about 8% to 87.10 million tons, while that of wheat--which is grown in winter--is expected to cross last year's level of 85.93 million tons. "Monsoon has been very encouraging this year...It will provide us the necessary impetus," the minister told a conference to discuss crop prospects and estimates of the summer-sown output. Until Sept. 14, monsoon rains were 3% above normal, eroding previous concerns that the seasonal rains would drop below average this year. Most of India's farmlands depend on the monsoon for crop cultivation.
The fillip to farm output will not only help to roll out a food security law that guarantees cheap foodgrains to 75% of the population, but will also likely enable the government to hammer down persistent food inflation--the most vexing problem facing policymakers. India invited comments from the public for fine tuning the draft of the proposed food security law that is expected to be introduced in parliament during its winter session. Besides foodgrains, favorable weather has also improved the prospects of other summer-sown crops including oilseeds, sugarcane and cotton. The output of summer-sown oilseeds is expected to rise to 20.89 million tons from 20.84 million tons last year. Of the total oilseeds, the output of soybean is estimated at 12.57 million tons as against 12.65 million tons last year. The output of sugarcane is expected to rise nearly 1% to 342.19 million tons and cotton by 8% to 36.10 million bales. Each bale of cotton weighs 170 kilograms.
However, the output of summer-sown pulses is expected to drop to 6.43 million tons from 7.12 million tons last year.

China Likely To Produce Record 2011 Corn Harvest - Report (Source: CME)
China is likely to produce a record corn harvest of more than 180 million metric tons this year, China Daily said, citing an expert at a cabinet-level think-tank. Rising demand may outpace the increase in output, meaning imports are set to rise, Xu Xiaoqing, director of the department for rural economic development of the State Council's Development Research Center, told the paper. The state-backed China National Grain and Oils Information Center last month raised its forecast for 2011 corn output to 182.5 million tons, a 3% increase from 2010. China's corn is mostly harvested in October and November. China uses 105 million tons of corn a year for animal feed, and rising meat consumption is adding to demand, China Daily said. Another 60 million-70 million tons are used in the processing sector for products including starch and ethanol.
China has imported 208,298 tons of corn this year, down 26% from the same period last year. Higher shipments from the U.S. are expected in the corn crop year that started Sept. 1.

Libya buys more Russian wheat
LONDON, Sept 13 (Reuters) - Libya has bought 100,000 tonnes of Russian milling wheat in recent weeks and will need a further 500,000 tonnes of wheat in the coming months as it recovers from months of war, a trading company involved in Libyan grain deals told Reuters.
Libya was a big importer of food before six months of fighting interrupted supply chains. The ruling interim council is struggling to assert its control over the entire country and capture a handful of stubbornly defended towns that still back ousted leader Muammar Gaddafi.

Corn, Soybean Futures Called Lower on Economic Concern; Wheat May Climb (Source: Bloomberg)
What follows are opening calls for U.S. grain and oilseed markets.
-- Corn futures are called to open 3 cents to 5 cents a bushel lower on the Chicago Board of Trade on concern that a sagging global economy will reduce demand for food, livestock feed and fuel made from the grain, Jim Gerlach, the president of A/C Trading Inc. in Fowler, Indiana, said in a telephone interview.
-- Soybean futures may open 3 cents to 5 cents a bushel lower in Chicago as worldwide consumption ebbs, Gerlach said. Prices may rebound later on speculation that cold weather tomorrow may damage immature U.S. crops across the northern Midwest, he said. Soybean-oil futures are expected to open steady to down 0.1 cent a pound, and soybean-meal futures may open little changed.
-- Wheat futures may open steady to 3 cents a bushel higher on the CBOT on speculation that an emerging La Nina weather pattern will reduce global production next year, Gerlach said. Prices on the Kansas City Board of Trade and the Minneapolis Grain Exchange may fall 2 cents to 5 cents as rain in the southern U.S. Great Plains in the next week might boost soil moisture for planting winter crops, he said.

Ukraine Corn Exports To Double, Helping To Boost World Supplies (Source: CME)
Ukraine corn exports are set to double over the next year, providing some relief to global grain markets that face a likely disappointing U.S. harvest. The jump in shipments is forecast to make the eastern European nation the world's third-largest exporter of corn, surpassing Brazil for the first time in seven years. Ukraine is forecast to harvest a record crop after a devastating drought last year. Farmers there planted more corn and used higher quality seed to take advantage of strong prices, and then the crop benefited from favorable summer weather. Ukraine exports could reach 12.5 million metric tons this season, up from 5.3 million metric tons last year, according to Ukrainian agricultural analysis agency APK-Inform. The U.S. Department of Agriculture forecasts Ukraine will ship 10 million metric tons for the crop year that started this month, an 82% rise from last year.
The surge comes as corn prices stand at historic highs as a hot, dry summer trimmed the size of the U.S. crop. The USDA in a report earlier this week forecast U.S. farmers will receive record prices for the corn that's starting to come out of the field. "If you're going to have surplus production for corn, this is the year to do it," said Shawn McCambridge, senior grains analyst for Jefferies Bache, a brokerage in Chicago. Still, Ukraine's exports sharply lag the U.S. and Argentina, which are projected to ship 41.9 million metric tons and 19.5 million metric tons, respectively, according to the USDA. Global supplies are forecast to hit precariously low levels for a second straight year as demand by ethanol makers, livestock producers and food processors continues to grow. The United Nations Food and Agriculture Organization said last week its food-price index slipped less than a point in August to 231 points, just below a record high set in February.
Forecasts for the U.S. crop have declined in recent months. The harvest is still expected to be the third largest on record, but falls short of expectations in the spring when farmers planted a huge crop in response to tight supplies and high prices. Ukraine could step in to fill some of that void, with livestock producers in countries such as Egypt, Ukraine's biggest customer, benefiting. The surge in exports could ease price pressures as Ukraine "increases the amount of (animal) feed supplies that are available as an alternative to high-priced U.S. corn," said John Kleist, broker and analyst for, an agricultural advisory and brokerage firm. Analysts expect the increase in exports from Ukraine to be sustainable as long as high corn prices continue to encourage production. Increased wheat exports from the Black Sea region already are helping to expand global grain supplies and limiting price gains.
Taxes imposed on grain exports by Ukraine's government could be one limiting factor for the country's export growth, said Andrey Sizov Jr., managing director of Moscow-based think tank Sovecon. Yet, most analysts played down the impact of the recently imposed duties, saying Ukraine's prices were still expected to remain below global levels. Svetlana Sinkovskaya, marketing manager at the Ukrainian body APK-Inform, noted the export taxes are due to be lifted at the start of next year anyway.

Wheat Rebounds From Five-Week Low as High Corn Costs May Spur Feed Switch (Source: Bloomberg)
Wheat futures rebounded from a five-week low on speculation that demand will increase from livestock producers seeking an alternative to higher-priced corn as a feed grain. Wheat futures for December delivery were 21 cents a bushel cheaper than the comparable corn contract yesterday in Chicago, the biggest discount since at least 1959. Wheat usually trades at a premium to corn. About 240 million bushels of wheat will be in feed and residual use this year, 80 percent more than last year, the U.S. estimated on Sept. 12. Corn prices have gained 46 percent in the past year after adverse weather hurt the U.S. crop. “We’ll see more switching to wheat for feed purposes” at current prices, Frank Cholly Sr., a senior market strategist at MF Global Holdings Inc. in Chicago, said in a telephone interview. “We should see demand pick up.”

Raw sugar dips, October premium eyed
LONDON, Sept 14 (Reuters) - ICE raw sugar futures eased in early trade  with the focus remaining firmly on front month October and its premium to March .
The premium was trading around 1.4 cents a lb in early trade, well below Monday's peak of more than 2.00 cents but still significantly above last week when it traded as low as 0.57 cent.

Vietnam Agribank to lend $240 mln for coffee business
HANOI, Sept 14 (Reuters) - Agribank, Vietnam's largest lender, said it would lend the coffee sector nearly 5 trillion dong ($240 million), an amount that falls short of industry demand for funds required to stockpile up to 300,000 tonnes of beans to support prices.
Vietnam, the world's second-largest coffee producer after Brazil, is nearing a bumper crop expected to start next month and the country's coffee industry has planned to keep nearly a quarter of the crop output off the market for several months.

CoffeeNetwork sees record 2012/13 global crop
ANTWERP, Belgium, Sept 13 (Reuters) - World 2012/13 coffee output is expected to reach a record 142 million 60-kg bags, up from 135 million the previous year, analysis firm CoffeeNetwork said on Tuesday.
Speaking on the sidelines of the World Coffee Outlook Conference, CoffeeNetwork analyst Andrea Thompson said the next crops from top world producers Brazil and Vietnam were expected to be at record levels.

Brazil 11/12 cotton output seen higher - trade group
SAO PAULO, Sept 13 (Reuters) - Farmers in Brazil may cut area planted to cotton next season due to competition from soy and corn but output could rise as production focuses on choice fields, Brazilian cotton exporters' association Anea said.
Cotton competes for land with soy and corn in Brazil's main summer crop, and persistently high prices for the grains could mean less available area for production of the lint.

Colombia '11 main coffee crop may be hit by rains
BOGOTA, Sept 13 (Reuters) - Colombia's main coffee harvest later this year may be hit by heavier-than-normal rains due to the reappearance of La Nina, throwing into doubt growers' production targets, officials and industry players said.
Colombia's coffee production fell through the first half of 2011 after heavy rains caused by the La Nina weather anomaly hit crops during their vital flowering stage last year, and now farmers fear a return of the weather phenomena.
Brazil coffee crop seen record for off-year--gov't
SAO PAULO, Sept 13 (Reuters) - Brazil's 2011/12 coffee crop forecast was slightly reduced on Tuesday by the Agriculture Ministry's crop supply agency Conab, but the output would still be the highest ever for an off-year harvest.
The crop was estimated at 43.15 million 60-kg bags, down from the 43.5 million bags projected in May, Conab said in its third forecast of the current crop that recently ended harvest.
The world's No.1 coffee producer, Brazil harvested 48.1 million bags in 2010/11. Its coffee output rises and falls in a biennial cycle.

Ethanol industry to stay hungry for U.S. corn
KANSAS CITY, Mo., Sept 14 (Reuters) - The U.S. ethanol industry is keeping its foot on the gas pedal at production plants and if the trend continues it could defy a government forecast that the industry will have its first drop in corn use since the turn of the century.
The government forecast, which was issued on Monday, was based on expected weaker gasoline use and higher corn prices. Ethanol is blended with gasoline. In addition, some analysts said the expiration of an industry tax credit at the end of the year could also eat into profits.

BP Makes Further Inroads Into Brazil Biofuels (Source: CME)
BP PLC's as the U.K. oil major said it had bought the 50% of Brazilian biofuel company Tropical BioEnergia it didn't already own in a deal valued at $71 million and paid another $25 million to raise its stake in sugar and ethanol firm Companhia Nacional de Acucar e Alcool, or CNAA. The acquisition of Tropical BioEnergia means BP now has three ethanol-producing mills in Brazil, two of which were gained with its purchase of an 83% stake in CNAA in March. Although it only bought an additional 3% in CNAA, by converting the company's long-term debt to equity following the earlier transaction it now controls over 99% of the firm's issued-share capital. Philip New, vice president of BP Biofuels, said: "This is another significant milestone in BP's global biofuel strategy as we expand our operations base and demonstrate our genuine commitment to Brazil's ethanol industry, which can deliver sustainable and competitive biofuels into the global market."
BP said it intends to double the size of the operations at Tropical BioEnergia to a capacity of 5 million tons of crushed cane, or 450 million liters of ethanol equivalent, a year. BP was the first global oil major to make an acquisition in Brazil's ethanol sector, buying a 50% stake in Tropical BioEnergia in 2008. Other oil majors have followed, including Royal Dutch Shell PLC, which undertook a $12 billion tie-up with Cosan S/A Industria e Comercio, the world's largest sugar and ethanol group, in February last year. Brazil has attracted increased attention from global oil majors seeking exposure to the domestic market, where more than 80% of all new cars sold are flex-fuel models that can run on any mixture of ethanol and gasoline. Latin America's largest country is also seen as a low-cost production base for key export markets such as the U.S., Europe and Asia, where use of biofuels is expected to rise as countries aim to reduce carbon emissions.
Mario Lindenhayn, who heads BP Biofuels in Brazil, said the deals will hasten BP's biofuels growth agenda. "This transaction, together with other recent acquisitions, gives us a strong platform from which to expand our capacity to supply both domestic and international fuels markets."

Mexico delays 1.3 mln barrels of oil output on storm
MEXICO CITY, Sept 13 (Reuters) - Mexico's state oil company Pemex said on Tuesday 1.331 million barrels of oil production was delayed after the company shut down platforms last week due to Tropical Storm Nate.
Pemex said after the Sept. 7-11 closure at the country's two largest fields, Ku Maloob Zaap and Cantarell, operations were back to normal and the losses from the storm would be made up at a later date.

Euro Coal-Oct S.Africa prices slump $6 to $111/T
LONDON, Sept 13 (Reuters) - Prompt South African coal prices slumped by another $6.00 a tonne or 5 percent on Tuesday as traders struggled to find buyers for cargoes due to load in a few weeks' time while DES ARA prices slipped by 25-50 cents.
There was a mix of banks, traders, producers and utilities in the market on Tuesday but although bids and offers were close, few trades were done.

SocGen slashes thermal coal price forecasts
LONDON, Sept 13 (Reuters) - Thermal coal supply will grow by around 58 million tonnes in 2012 from this year's levels, barring weather events, which will push benchmark coal prices down, Societe Generale said in a report on Tuesday.
Buyers consider present coal prices to be unjustified due to the overhang of high-grade coal in the aftermath of the Japanese force majeure, SocGen said.

Brazil's diesel shortfall to boost Asian market
SINGAPORE, Sept 14 (Reuters) - A diesel shortage in Brazil as refining capacity fails to keep pace with growing industrial demand will boost the country's imports of the fuel from Asia for at least the next two years, helping to mop up a regional surplus.
Growing competition for Asian supplies, coming at a time when fuel demand from China and India are expected to rise in line with their booming economies, will help tighten a market whose gains this year have been capped by high supplies.

Oil tanker waits off Libya for loading instruction
LONDON, Sept 13 (Reuters) - An oil tanker is waiting off Libya for loading instructions, the owner of the vessel said on Tuesday.
In a sign that war-torn Libya was working to get its oil industry back on its feet, market sources said the tanker would probably load a part of a Libyan condensate tender, which was offered late last week.
Oil Trades Near 2-Day Low on Rising Fuel Stockpiles, European Debt Outlook (Source: Bloomberg)
Oil traded near a two-day low in New York as signals that U.S. fuel demand is weakening countered optimism that European leaders will step up efforts to resolve the region’s sovereign debt crisis. Futures were little changed after slipping as much as 0.4 percent. Gasoline stockpiles rose 1.94 million barrels last week, the biggest gain since June, according to the Energy Department. Supplies of distillate fuel, a category that includes heating oil and diesel, increased to the highest level since February. Equities and the euro climbed after German and French leaders said they are “convinced” Greece will remain in the single currency. Crude for October delivery was at $88.80 a barrel, down 11 cents, in electronic trading on the New York Mercantile Exchange at 10:23 a.m. Sydney time. The contract yesterday slid $1.30, or 1.4 percent, to $88.91. Prices are up 17 percent the past year.

Iron Ore-Spot offers slip below $190/T; Shanghai rebar falls
SHANGHAI, Sept 14 (Reuters) - Spot iron ore prices fell below $190 per tonne on Wednesday, as  Chinese steel mills continue to stay on the sidelines of the seaborne market as steel prices fall despite the traditional consumption peak season.
Steelmakers in China, the world's top iron ore buyer and steel producer, have stepped away from imports and have preferred to buy domestic ore to lower production costs after offers inched above $190 per tonne last week.

China's steel output dip in Aug, Baosteel up Oct prices
SHANGHAI, Sept 13 (Reuters) - China's crude steel output fell 0.9 percent to 58.75 million tonnes in August from the previous month as several steel mills reduced production due to maintenance, official figures showed.
Data released by the National Bureau of Statistics on Tuesday showed that China's daily crude steel output fell below 1.9 million tonnes for the first single month this year, with the mills scheduling maintenance to take advantage of weak consumption season over the summer period.

China's Baosteel says to lift October prices
SHANGHAI, Sept 13 (Reuters) - China's top listed steelmaker Baoshan Iron & Steel  will raise its main steel product prices for October bookings, the company said on Tuesday.
The company, usually known as Baosteel, led its domestic peers in price increases for September bookings in anticipation of improving demand in the traditional consumption season.

Freeport Copper Miners in Peru, Indonesia Strike to Support Wage Demands (Source: Bloomberg)
Freeport-McMoRan Copper & Gold Inc. (FCX)’s copper miners in Peru and Indonesia went on strike today after pay-increase talks broke down, union officials said. About 1,200 workers at Freeport’s Sociedad Minera Cerro Verde SAA (CVERDEC1) unit, Peru’s third-largest copper producer, walked off their jobs at 8:30 a.m. New York time, Mining Federation General Secretary Luis Castillo said today by telephone. About 8,000 non-staff workers at Freeport’s Grasberg mine in Indonesia started a one-month strike at midnight local time, said Virgo Solossa, head of organizational affairs at the labor union. Workers in Peru, Chile, Bolivia and Indonesia have gone on strike at copper, gold and zinc mines this year, seeking improved conditions and a bigger slice of record profits. Copper yesterday rose as much as 1.5 percent as threats of mine strikes heightened concern a global shortfall will increase.

Gold Prices Drop as Concerns Ease on European Debt Woes, Dollar Advances (Source: Bloomberg)
Gold futures fell as the prospect of financial support from China eased concern that the European debt crisis will worsen, eroding demand for the metal as a haven. China is willing to buy the bonds of nations hit by the debt crisis, said Zhang Xiaoqiang, a vice chairman of the National Development and Reform Commission, according to Caijing magazine. Equities rallied in the U.S. for a third day, and the dollar rose against a basket of major currencies, reducing the appeal of gold as an alternative investment. “Europe is trying to find ways to ward off the crisis,” Tom Pawlicki, a Chicago-based analyst at MF Global Holdings Ltd., said in a telephone interview. “The dollar being slightly up is also acting against gold.”

Baltic index rises for 4th day, gains slow
LONDON, Sept 13 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, rose to its highest in nearly nine months on Tuesday although freight derivatives contract selling pared the pace of gains seen in recent days.
The overall index rose 1.35 percent or 25 points to 1,901 points in a fourth session of gains and was at its highest since Dec. 20.

Maersk Line says container sector to stay depressed
LONDON, Sept 12 (Reuters) - Conditions in the overall ship container industry will remain depressed in the coming months due to a glut of ships on order, the chief executive of Maersk Line, the world's biggest container shipping company, said on Monday.
Prospects for a recovery in the global container shipping industry could be derailed if global economic turmoil spreads and consumer demand in Europe and the United States slides.

SocGen Says It’s Underweight in Commodities Which Are Now in ‘Danger Zone’ (Source: Bloomberg)
Societe Generale SA’s global asset allocation team went “underweight” on commodities, saying the asset class is in the “danger zone.” The team recommends that investors position for higher gold prices and lower oil prices, one of seven key calls made in the report distributed today by the Paris-based bank. The precious metal should benefit from risk aversion, central-bank purchases and negative real interest rates, the team wrote. Crude and copper may decline as economic growth slows and the dollar gains against the euro. “Prices of cyclically sensitive commodity prices, such as crude oil and copper, have held up well over recent weeks despite the recent deceleration in economic activity,” Societe General strategists Alain Bokobza, Roland Kaloyan, Arthur Van Slooten and Philippe Ferreira wrote in the report. “This should contribute to a meaningful drop in the prices of these commodities.”

Commodities Drop, Paced by Oil and Copper, on Concern Demand May Weaken (Source: Bloomberg)
Commodities declined, led by crude oil and copper, on concerns that demand for raw materials may ease as the euro-zone debt crisis remains unresolved and the Asian Development Bank cut its growth forecast for the region. Greek Prime Minister George Papandreou will hold a conference call with German Chancellor Angela Merkel and French President Nicolas Sarkozy today amid increasing speculation that Greece will default. The Manila-based ADB cut its 2011 growth forecast for Asia excluding Japan to 7.5 percent from an April estimate of 7.8 percent, according to the Asian Development Outlook 2011 Update report released today. “Sovereign-debt problems still wait for credible solutions, leaving risk appetite on shaky ground,” Stefan Graber, a commodity analyst at Credit Suisse Group AG in Zurich, wrote in an e-mailed report today. “For now we take a cautious stance on the cyclical metals space.”

Commodity ETP Investments Decline to $7.8 Billion, Barclays Capital Says (Source: Bloomberg)
Investors placed 29 percent less cash in commodity exchange-traded products in the first seven months of the year, Barclays Capital said in a report. Commodity-based ETP inflows totaled about $7.8 billion, down from from $11 billion a year earlier, Barclays Capital analyst Roxanna Mohammadian-Molina said today in the e-mailed report. Investors cut inflows into commodities even as economic news pushed up gold prices by 15 percent in the year through July and Standard & Poor’s GSCI Index of raw materials gained 8.6 percent. “This picture across the mainly retail investor-driven ETP market contrasts with the rising official sector appetite for gold, the healthy demand for physical gold and the increase in net-long positions in the futures markets,” Mohammadian-Molina wrote in the report. “Despite the sheer number of potentially damaging risks affecting the economy, commodity-linked ETPs have seen weak inflows.”

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