Commodities Retreat On Worries Of China Rate Hike

Published on November 15, 2010 by admin   ·   No Comments
Commodities tumbled across the board, part of a wider market selloff as worries grow that China will take additional actions to slow its surging economy.
Data from China released Thursday showed inflation rising faster than anticipated, which could force China’s central bank to raise interest rates or take other steps to slow growth. Grains and metals had risen on the report Thursday but they backtracked Friday along with crude oil and equities markets. Cotton and sugar, which fell from multi-year highs earlier this week, saw additional declines.>>>

Commodities Soar As Surging Demand Meets Dwindling Supplies

A broad array of commodities hit multiyear highs as producers of metals and agricultural goods are finding it increasingly more difficult to meet robust demand. >>>>> More

Commodity News Snapshot-Pakistan

THE RUPEE: firm trend

KARACHI (October 05, 2010): The rupee managed to retain its weekend's firmness against dollar on the currency market on Monday, dealers said. The rupee inched up by one paisa in relation to dollar for buying at 86.20 and two paisa for selling at 86.24, they said. In first Asian trade, the dollar surged higher in a short-covering rally against yen, which retreated against other currencies as investors unwound some long yen positions ahead of a Bank of Japan (BoJ) policy meeting this week.

Steady trend on cotton market

KARACHI (October 05, 2010): Firmness prevailed on cotton market on Monday as prices held the previous levels due to short crop news, dealers said. The Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 7100, they said. In ready business, nearly 17,000 bales changed hands at rates between Rs 6900 and Rs 7200, they said.

Silver price hits new high, gold dips

KARACHI (October 05, 2010): Gold prices on Monday swelled to Rs 42,500 per tola from record high but silver price reached new peak of Rs 640 per tola on the local market, traders said. Gold was available for Rs 42, 600 on Saturday, which dipped by Rs 100 to Rs 42, 500, traders said, adding that gold price per 10-gram went down to Rs 36,428 from Rs 36,514.

Bullion Rates

KARACHI (October 05, 2010): Gold and silver rates in rupees per 10 grams prevailing in major cities on Monday (October 04, 2010).

International News

Liffe sugar falls, robustas slide

LONDON (October 05, 2010): Liffe front-month, December white sugar falls $14.1 to end at $606.00 per tonne on Monday. Dealers said sugar could drop further to entice physical buyers after a sharp rally to a seven-month high last week. Liffe second-month cocoa ended 19 pounds lower at 1,867 pounds a tonne, with the market focused on the start of West African main crop harvesting.

Gold near record highs in Europe

LONDON (October 05, 2010): Gold steadied on Monday, supported near record highs as investors fretted about the outlook for the dollar amid speculation of further US monetary easing, but with a recovery in the US unit keeping a lid on gains. Spot gold was bid at $1,315.55 an ounce at 1347 GMT, against $1,315.60 late in New York on Friday. It touched a record $1,320.80 an ounce in that session.

Oil off 2-month high

LONDON: Oil eased from a two-month high on Monday. By 1155 GMT, US crude fell 14 cents to $81.44 a barrel, after touching $81.87 earlier, the highest level since Aug 6. Prices have risen about 10 percent since the Sept 21 close at around $73.50.

Commodity News Snapshot-Pakistan

THE RUPEE: dollar rise continues

KARACHI (September 29, 2010): No recovery was seen in the value of the rupee versus dollar on the currency market on Tuesday, dealers said. The rupee drifted lower in terms of the US currency, shedding 12 paisa for buying and selling at 86.14 and it also lost 10 paisa for selling at 86.18, they said. In the second Asian trade struggling dollar got a reprieve, helped by a report that the Federal Reserve was weighing a more open-ended, smaller-scale bond buying programme compared with 2009.

Upward trend persists on cotton market; spot rate raised Rs 7,250

KARACHI (September 29, 2010): Persisting demand pushed the prices further higher on the cotton market on Tuesday, dealers said. The Karachi Cotton Association (KCA) official spot rate was raised further by Rs 100 to Rs 7250, they said. In the ready business nearly 20,000 bales of cotton changed hands between Rs 4200-7450, they said.

Government urged to allow tax-free import of raw sugar

MULTAN (September 29, 2010): Peerzada Abdul Ali Zakir Usmani President of Anjuman Kashtkaran Punjab (Farmers Association of Punjab) has urged the government to allow tax-free import of raw sugar to meet the shortage of sugarcane supply to sugar mills by November. He said that in the backdrop of ongoing sugar crisis in the country the retail price of sugar increased from Rs 45 per kilo to Rs 85 per kilo in a short span of time.

International News

Oil rises to near $77 on unexpected US supply fall

SINGAPORE: Oil prices rose to near $77 a barrel Wednesday in Asia after a report showed U.S. crude supplies dropped last week, suggesting demand may be improving.

 

Gold falls off record, market awaits data

LONDON: Gold fell on Tuesday as investors paused for breath and awaited economic data after betting the metal up to a record $1,300 an ounce in the previous session.

 

Gold hits record high

NEW YORK (September 29, 2010): US gold futures settled on Tuesday near its new all-time high driven up as three reports argued for further quantitative easing by central banks that drove the euro up against the dollar and set off stop-loss buy orders in both markets, traders said. COMEX December gold futures closed up $9.70 at $1,308.30 an ounce on the COMEX division of the NYMEX.

 

Liffe sugar rises

LONDON (September 29, 2010): Liffe December white sugar rises $0.90 to end at $645.00 per tonne on Tuesday. Market underpinned by adverse weather in key producers such as Brazil, Central America, India and Australia. Liffe December cocoa ended 7 pounds lower at 1,893 pounds a tonne. Market remains under pressure, weighed by a favourable outlook for West African main crop.

Commodity News Snapshot-Pakistan

THE RUPEE: all-round slide

KARACHI (September 28, 2010): All-round slide was seen on the currency market on Monday due to strong demand for the greenback, dealers said. The rupee extended the overnight fall, losing five paisa more versus dollar for buying at 86.02 and shed seven paisa for selling at 86.08, they said. In the first Asian trade dollar edged up from five-month lows as euro ran into profit-taking, and it dug in against yen as intervention jitters lent support.

 
Floods destroy cotton worth Rs 74 billion in South Punjab

MULTAN (September 28, 2010): Thousands of farmers of south Punjab would be forced to come on roads and protest against government because floods had played havoc in 450 villages of Muzaffargarh and Rajanpur district and their 2 million bales of cotton worth Rs 74 billion has destroyed.

KCA raises spot rate to Rs 7,150 in stable trend on cotton market

KARACHI (September 28, 2010): Firmness prevailed on the local cotton market on Monday as prices recovered due to short supply and high demand, dealers said. The Karachi Cotton Association (KCA) official spot rate was raised by Rs 300 to Rs 7150, they said. In the ready business, nearly 10,000 bales of cotton changed hands between Rs 7100-7300, they said.

Ban on gur export to Afghanistan sought: government asked to import 0.5 million tons of raw sugar for mills

KARACHI (September 28, 2010): The Pakistan Sugar Mills Association (PSMA) has asked the government to import 500,000 tons of raw sugar and impose complete ban on export of gur (raw sugar) to overcome likely sugar crisis in the country. In a letter, exclusively available to Business Recorder, PSMA Chairman Iskander M Khan has requested the Planning Commission to allow import of 500,000 tons of raw sugar and impose a ban on export of gur for avoiding another crisis.

Generating funds to open LCs: TCP directed to auction 50,000 tons of sugar in open market

ISLAMABAD (September 28, 2010): The Trading Corporation of Pakistan (TCP) has been directed by the federal government to auction 50,000 tons of imported sugar in the open market to generate funds for opening of letters of credit (LCs) for the remaining contracted quantity of sugar, sources close to Secretary, Industries, told Business Recorder here on Monday.

 

Need to maintain wheat production, reserves emphasised

LAHORE (September 28, 2010): Besides achieving self-sufficiency in wheat production, Pakistan should also maintain its reserves to tackle food problems during natural calamities. This was stated by Dr Noor-ul-Islam, Director General Agriculture (Research), AARI while addressing a meeting of agricultural scientists, held to finalise Annual Research Programme of Wheat 2010-2011.

 

Bullion Rates

KARACHI (September 28, 2010): Gold and silver rates in rupees per 10 grams prevailing in major cities on Monday (September 27, 2010).

 

International News

Malaysian palm oil at 15-month high

KUALA LUMPUR (September 28, 2010): Malaysian palm oil hit a 15-month high and other global vegetable oil markets rallied on Monday as traders bet on top buyers China and India snapping up more cargoes in the months to come. An industry conference in Mumbai forecast India will buy a record amount of vegetable oil in the new marketing year and China's Ministry of Commerce revised up its estimate for September soy imports.

 

Gold hits record at $1,300 an ounce

·         Silver at 30-year high; copper stalls ahead of $8,000

LONDON: Gold powered to a record high at $1,300 an ounce on Monday, with investors pouring more cash into the market on global economic health worries and the possibility of further quantitative easing to stimulate growth.

Oil falls below $76 a barel

LONDON: Oil fell below $76 a barrel on Monday, tracking weak stock markets, as the outlook for global economic recovery and future energy demand remained uncertain.

US MIDDAY: sugar soars

NEW YORK (September 28, 2010): Raw sugar futures closed at a seven-month high for the second straight day on Monday, while arabica coffee and US cocoa also finished higher. The spot October raw sugar contract surged 0.65 cent or 2.6 percent to close at 26.09 US cents per lb, with most-active March up 0.58 cent to end at 24.98 cents, the highest settlement for the second position since February.

Commodity Volatility May Gain Amid Recovery Concerns, SocGen's Godin Says

Commodity prices, which have surged to the highest level since January, may see greater volatility as investors react to threats to the global economic recovery, according to Societe Generale SA. 

“We’re not completely out of the crisis,” Olivier Godin, the bank’s head of commodities derivatives in Asia, said in an interview from Hong Kong. “There might be some bumps along the way, and that’s going to affect our markets.” 

The Reuters/Jefferies CRB Index of 19 raw materials has advanced to an eight-month high, driven by a weaker dollar. Cotton has jumped to the highest price in 15 years amid a supply squeeze, while gold climbed to a record yesterday. Wheat more than doubled between June and August as drought slashed the Russian harvest. Corn has rallied to a two-year high. 

The European government-debt crisis, shifts in currencies, or U.S. political developments may “move the market as much as fundamental factors,” said Godin, who works for SocGen’s corporate & investment-banking arm and has traded commodities for more than 15 years. 

Investors planned to increase their commodity investments over the next three years, expecting returns to match or beat historical averages, Barclays Capital, the investment-banking arm of Barclays Plc, said in March, citing a survey. 

‘React Very Quickly’

“Commodities will react very quickly to any global, macro factor, much more these days than before with the growth of investors’ participation,” Godin said on Sept. 22 by phone. 

The CRB Index’s 30-day historical volatility, a measure of how much commodities fluctuate, declined to 11.3 percent last week, the lowest level since October 2007. The measure rose to 50 percent in November 2008 as prices collapsed following the failure of Lehman Brothers Holdings Inc. 

Europe’s sovereign-debt crisis, which began in Greece, stoked investor concern earlier this year that the possibility of a default may derail the economic recovery. The crisis sent the euro lower and hurt commodity prices, including copper. 

The metal, seen by some investors as a gauge of economic activity as it’s used in construction, slumped 16 percent in the three months to June 30, the worst quarterly performance since 2008. Three-month futures also dropped as authorities in China, the largest metals user, curbed loans for third-homes and raised mortgage rates from mid-April to prevent asset bubbles. 

Copper has risen 21 percent since the end of June as the Dollar Index fell 7.6 percent and global stockpiles shrank. The contract on the London Metal Exchange reached a five-month high of $7,990 a metric ton on Sept. 24, and traded today at $7,885. 

“In the last five years, there’s been a very important growth in the commodities trades in Asia, especially from China,” Godin said. “I don’t see why that will not continue because raw materials are transformed and consumed in great deal in emerging countries like China and India.” 

China’s economy may expand 9.5 percent this year, according to State Council researcher Zhang Liqun. The country outpaced Japan as the second-largest economy last quarter after last year overtaking Germany as the largest exporter. 

To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net;

Commodity News Snapshot-Pakistan

THE RUPEE: fall likely to continue

KARACHI (September 27, 2010): The rupee may continue its fall with gradual pace, after hitting record low at 86.01 against dollar on the currency market during the week ended on September 24, 2010. On the interbank market, the rupee lost 25 paisa versus dollar for buying and selling at 85.97 and 86.01.

KCA spot rate fluctuates drastically, lint prices turn soft, volume of trade depicts panic selling

KARACHI (September 27, 2010): Firmer condition ruled on the cotton market partly for local limit mostly on world trend account during the past week ended on September 25, 2010 spot rate touched record Rs 7250 but could not hold the gains, by close of the week market condition forced KCA to cut the rate drastically to Rs 6850. Buyers remain active through out the week.

Indian move of possibly delaying cotton shipments may jeopardise cotton, textile business globally

KARACHI (September 27, 2010): Weather has started changing to moderately hot in day time and cold in night time which is considered quite ideal for maturity of cotton. With the increase in arrivals of seed-cotton, more and more ginning factories are going into operation.

Pakistan to export rice worth $2 billion this year

LAHORE (September 26, 2010): Despite a short fall of about 1.5 million tons in rice production due to devastating floods, Pakistan will be able to export rice worth $2 billion during FY 2010-2011. Former Chairman Rice Exporters Association of Pakistan (Reap) and a prominent rice exporter, Azhar Akhtar, told Business Recorder on Saturday that Pakistan has about 0.8 million tons of milled rice worth $800 millions as a carryover of the previous crop.

Rice held at port: Reap team likely to leave for Kenya soon

KARACHI (September 26, 2010): A delegation of Rice Exporters Association of Pakistan (Reap) is expected to leave for Kenya soon to resolve the issue of Pakistani rice held at Kenyan port. The delegation headed by Reap Vice Chairman Rafiq Sulaman is expected to hold meetings with the officials of Kenyan Ministry of Trade, Commissioner of Kenyan Revenue Authority, Director of Kenyan Board of Standard and the Kenyan rice importers during this visit.

International News

Gold powers to record above 1,300 dollars

LONDON (September 26, 2010): Gold prices shot above 1,300 dollars for the first time and silver nailed a 30-year high last week as traders exited the US currency for safe-haven investments on worries about fragile economic recovery. Gold and silver rallied as investment demand propelled precious metals higher.

Commodity spreads offer gains as markets stall

LONDON (September 26, 2010): Commodities have disappointed many investors over the last year but there are still gains to be made by trading spreads across and within commodity markets. VOC Capital Management, a small, specialist commodity-only fund manager based in London's Mayfair district, sees big profits in spreads in sugar, grains and natural gas, and expects to harvest yields by trading energy futures against base metals.

Asian sugar: Indian whites sold; Thai premiums near high

SINGAPORE (September 26, 2010): A small quantity of Indian white sugar changed hands for nearby shipment, but consumers shunned Thai origin because of high prices, dealers said on Wednesday. Indonesia's plan to buy nearly half a million tonnes of white sugar for shipment next year had yet to stir the physical market, with premiums for Thai whites steady at $200 above London futures - not far from a July record at $250.