Worst raw-material slump since ’08 seen deepening

Copper Surplus

Stockpiles of copper monitored by bourses in London, Shanghai and New York rose 17% in the past year, according to data compiled by Bloomberg. Supply will outpace demand by 407,000 metric tons this quarter, compared with a 636,000-ton shortfall in the previous six months, according to Barclays. Next year’s surplus will total 193,000 tons, from a 63,000-ton deficit in 2013, the bank says.

Farmers in the U.S., the biggest corn grower, will harvest a record 13.989 billion bushels this year, the government estimates. Ninety-five% of the U.S. harvest was complete as of Nov. 17. Hedge funds and other speculators have been net- short on the grain since July.

Global food costs tracked by the United Nations fell 14% from the all-time high reached in February 2011. The gauge dropped 3.9% this year, led by a 21% slump in cereal prices. Cash flows at Archer-Daniels-Midland Co., the world’s largest corn processor, “are benefiting from lower commodity prices,” Ray Young, chief financial officer of the Decatur-Illinois based company, said on an earnings conference call Oct. 29.

Sugar Glut

Sugar prices are heading for a third annual drop, with supplies exceeding demand by 4.73 million metric tons in the 12 months started Oct. 1, according to the London-based International Sugar Organization. Global soybean production will climb to an all-time high of 283.5 million tons, the U.S. Department of Agriculture forecasts. Record coffee crops from Brazil to Vietnam are compounding a global glut, expanding inventories to a five-year high, USDA data show.

J.M. Smucker Co. has seen “continued favorable impact” from lower commodity costs, and is passing along savings to customers via promotions, Chief Executive Officer Richard Smucker said in a conference call on Nov. 20. The company, based in Orrville, Ohio, makes Folgers coffee, the top-selling U.S. brand.

“Supply and demand imbalances have been really fueling huge stockpiles,” said Jack Ablin, the chief investment officer at BMO Private Bank in Chicago, who helps manage $66 billion of assets. “While we’re certainly looking for signals for an upturn in commodities, we’re not seeing many of them yet.”


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