Bloomberg News

Metals Fall as China Cuts Economic Target: Commodities at Close

March 05, 2012

The Standard & Poor’s GSCI Spot Index of 24 raw materials slipped a second day, dropping 0.1 percent to 703.43 at 4 p.m. in New York, after China, the world’s biggest metals consumer, cut the nation’s economic growth target. Metals and gas led the decline.

The UBS Bloomberg CMCI index of 26 prices dropped 0.6 percent to 1,638.09.

NATURAL GAS

Natural gas futures tumbled to a six-week low in New York as forecasts of above-normal temperatures across the continental U.S. signaled reduced demand for the heating fuel.

Gas, the worst performer this year in the Standard & Poor’s GSCI Spot Index, fell as much as 5.4 percent. Commodity Weather Group LLC in Bethesda, Maryland, said temperatures may exceed 70 degrees Fahrenheit (21 Celsius) in the mid-Atlantic and southern Midwest in the next two weeks. Gas supplies were 45 percent above the five-year average in the week ended Feb. 24.

Natural gas for April delivery fell 12.9 cents, or 5.2 percent, to settle at $2.355 per million British thermal units on the New York Mercantile Exchange, the lowest settlement price since Jan. 20.

PRECIOUS METALS

Gold declined for the second straight session after China announced the lowest economic growth target in seven years, curbing prospects for commodity demand and global growth.

Gold futures for April delivery fell 0.3 percent to settle at $1,703.90 an ounce at 2:04 p.m. on the Comex in New York. Prices dropped 3.7 percent last week, the most since Dec. 16, while the dollar gained 1.3 percent against a six-currency basket.

Silver futures for May delivery fell 2.4 percent to $33.695 an ounce. It’s the best-performing precious metal this year with a gain of 21 percent.

On the New York Mercantile Exchange, platinum futures for April delivery declined 1.7 percent to $1,662.60 an ounce. The metal dropped 1.4 percent last week. Palladium futures for June delivery decreased 0.8 percent to $706.95 an ounce.

BASE METALS

Copper fell the most in two weeks on concern that demand will slow after China, the world’s biggest metals consumer, cut its economic-growth targets.

The metal also fell on forecasts that automobile sales in China in the two months ended Feb. 29 are heading for the biggest decline in seven years after gasoline costs climbed to a record.

China “is not growing quite as fast as it was, and that’s taking some of the steam out of the market,” William O’ Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview. “People are concerned about the level of Chinese inventories.”

Copper futures for May delivery slid 1.1 percent to settle at $3.8595 a pound at 1:14 p.m. on the Comex in New York, the biggest loss since Feb. 17. The metal has gained 12 percent this year.

Nickel, zinc, lead, aluminum and tin also slid in London.

GRAINS, OILSEEDS

Corn futures rose to the highest price in almost four months on speculation that China will increase imports from the U.S., the world’s biggest shipper. Soybeans declined.

China should reform its corn-import system by dropping quotas for shipments or raising the amount that buyers are permitted to purchase, said Liu Yonghao, the chairman of New Hope Group Co., the nation’s top maker of livestock feed. U.S. grain delivered to China, including import duties and taxes, trades at a discount to domestic prices in southern ports, data from Shanghai JC Intelligence show.

Corn futures for May delivery gained 0.9 percent to close at $6.6075 a bushel at 1:15 p.m. on the Chicago Board of Trade. Earlier, the price reached $6.6525, the highest for a most- active contract since Nov. 9.

Soybean futures for May delivery dropped 0.6 percent to $13.25 a bushel in Chicago, snapping a 10-session rally, the longest since July. Earlier, the most-active contract touched $13.365, the highest since Sept. 21.

Wheat futures fell from a one-month high on speculation that rains this week in the U.S. Great Plains will improve the prospects of winter crops emerging from dormancy this month.

Areas of the Plains may get as much as 1.5 inches (3.8 centimeters) of precipitation through March 9, QT Weather said. The crop in Kansas, the biggest U.S. winter-wheat grower, was rated 52 percent good to excellent as of Feb. 27, up from 49 percent a month earlier, government data show. Parts of southern Kansas still suffer from dry conditions after months of below- normal rain, University of Nebraska at Lincoln data show.

Wheat futures for May delivery fell 0.4 percent to $6.72 a bushel at 1:15 p.m. on the Chicago Board of Trade. Earlier, the price reached $6.7775, the highest for a most-active contract since Feb. 1.

OIL PRODUCTS

Heating oil rose along with Brent crude and European gasoil as President Barack Obama and Israeli Prime Minister Benjamin Netanyahu discuss how to confront Iran over its nuclear program.

Futures gained as Obama, while asking Israel to help dial back “too much loose talk of war,” said he takes “no options off the table” including a military effort to stop Iran from having a nuclear weapon. Prices have been boosted by concern that tension over Iran’s nuclear research program, which has drawn sanctions, would escalate and disrupt production.

April-delivery heating oil gained 1.56 cents, or 0.5 percent, to settle at $3.2174 a gallon on the New York Mercantile Exchange, after falling 3.4 percent last week. Prices are up 9.6 percent this year.

Gasoline slipped as equities fell after U.S. factory orders sank and China cut its economic growth outlook, raising concern about the global economy and fuel demand. The Standard & Poor’s 500 Index fell 0.4 percent at 3:18 p.m. in New York.

Gasoline for April delivery sank 1.41 cents, or 0.4 percent, to settle at $3.258 a gallon on the exchange, after fluctuating between $3.2936 and $3.2475. Prices have gained 21 percent this year.

Gasoline’s premium to heating oil narrowed to 4.06 cents from 7.03 cents on March 2.

SOFT COMMODITIES

Cocoa, sugar and coffee futures fell on speculation that slowing economies in nations including China will dent demand.

China cut its annual target for economic growth to 7.5 percent from the 8 percent goal in place since 2005. Europe’s output from services and manufacturing in February was less than estimated on Feb. 22. Cocoa has tumbled 38 percent in the past year, coffee has declined 26 percent and sugar has fallen 17 percent.

“China is on the demand side of everything,” Michael Smith, the president of T&K Futures and Options Inc. in Port St. Lucie, Florida, said in a telephone interview. “The news out of China is adding downward pressure.”

Cocoa for May delivery dropped 2.2 percent to settle at $2,283 a metric ton at 12:07 p.m. on ICE Futures U.S. in New York, the biggest drop for a most-active contract since Feb. 23.

Raw-sugar futures for May delivery declined 1.1 percent to 24.68 cents a pound.

Arabica-coffee futures for May delivery fell less than 0.1 percent to $2.017 a pound.

In London futures trading, cocoa, robusta coffee and refined sugar declined on NYSE Liffe.

LIVESTOCK

Cattle futures fell the most in three months and hogs declined on speculation that U.S. meat demand will slow as higher gasoline prices trim consumer budgets.

Wholesale beef slid for a second straight day on March 2, while wholesale pork dropped 0.7 percent last week, U.S. Department of Agriculture data show. The national average gasoline price climbed to $3.767 a gallon yesterday, the highest since June, according to the American Automobile Association.

“Gas costs are an issue for meat pricing as a whole,” Rich Nelson, the director of research at Allendale Inc. in McHenry, Illinois, said in a telephone interview. “That’s been a big concern for us in the past two weeks.”

Cattle futures for April delivery fell 1.2 percent to settle at $1.284 a pound at 1 p.m. on the Chicago Mercantile Exchange, capping the biggest drop since Dec. 5. Prices have still climbed 5.7 percent this year.

Feeder-cattle futures for April settlement dropped 1.5 percent to $1.5895 a pound. On March 2, the commodity rose to a record $1.6205.

Hog futures for April settlement slid 1.1 percent to 89.425 cents a pound. The commodity has gained 6.1 percent this year.

CRUDE OIL

Oil edged higher as U.S. President Barack Obama and Israeli Prime Minister Benjamin Netanyahu met to discuss how to confront Iran over its nuclear program and as China cut its economic growth target.

Futures posted the smallest move in 10 months after Obama said that “all options” are available to prevent a nuclear- armed Iran in a meeting with Netanyahu today at the White House. Prices fell as much as 1.1 percent earlier as China’s Premier Wen Jiabao said his country will aim for expansion of 7.5 percent this year, the lowest goal since 2004.

Oil for April delivery rose 2 cents to settle at $106.72 a barrel on the New York Mercantile Exchange. It was the smallest one-day move since April 25. Prices are up 2.2 percent in the past year.

Brent oil for April settlement increased 15 cents to $123.80 a barrel on the London-based ICE Futures Europe exchange in London. The European benchmark’s premium to West Texas Intermediate futures widened to $17.08 a barrel from last week’s close of $16.95.

Wen announced China’s GDP goal while delivering a state-of- the-nation speech to about 3,000 lawmakers at the annual meeting of the National People’s Congress in Beijing today. The growth target matched the median forecast of 15 economists surveyed by Bloomberg News last month.

To contact the reporter on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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