Cattle advanced as demand for beef rose, while supply decreased. Beef price increased 5 percent in the United States this year, following the 10 percent increase in 2011. Beef exports jumped 25 percent in the 10 months ended October 31 from a year ago, while cattle herds were record small last year. April futures for cattle delivery rose 0.9 percent to $1.264 per pound at 13:00 on CME.
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Global stockpiles fell 22 percent since March and were at the lowest level since October 2009 this month.

The European Central Bank injected money in Europe’s financial system by providing loans to European banks in an attempt to battle with the region’s crisis. Goldman Sachs Group Inc. predicted that Europe’s demand for copper will increase in the next quarter and prices will advance 26 percent in the next year.

The US economy continuously shows signs of improvement, improving prospects for industrial metals. Durable goods orders rose 3.8 percent in November after no growth was registered in October.

Copper rose from $3.4250 to $3.4470 per pound today on COMEX and earlier reached $3.4635 — the highest level since December 13.
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The US Department of Agriculture estimated that the world production will grow 4.8 percent to 867.5 million metric tons in the 2011–12 season. The global stockpiles will shrink by just 0.8 percent, demonstrating the smallest drop in three years. The output from the United States is expected to decline by 1.1 percent, by the growth of the production in other parts of the world, including the European Union and Russia, should surpass the predicted drop. Supply is rising as farmers reacted to the record prices this year by boosting production.

Corn prices advanced yesterday on the speculation that adverse weather in South America would hurt crops in South America and would increase demand for supplies from the USA. The prices reached the highest level since November 17.

Corn spot price was down from $6.1550 to $6.1450 per bushel as of 3:27 GMT today on CBoT. Yesterday, the price jumped from $6.0575 to $6.1675, while the daily high was $6.1900. The prices reached the record level of $7.9975 on June 10.
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Corn was up from $5.8000 to $5.8575 per bushel on CBoT today, following the intraday drop to $5.7000 per bushel. Soybean price advanced from $11.2550 to $11.3000 per bushel today after falling earlier to $11.2025 per bushel.

Wheat was a different story as it declined on the forecast that the demand will decrease, while stockpiles will grow, yet the crop was also trying to erase its losses by the end of the trading session. Economists expect China to reduce its wheat import as the nation’s economy is slowing. Market forecasters predict that the report of the US Department of Agriculture on December 9 will show that the global wheat inventories rose 202.89 million tons, compared to the November estimate of 202.6 million tons.

Wheat closed at $5.9775 per bushel on CBoT down from the opening price of $6.0050, but significantly above the daily low of $5.8825.
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Corn also advanced, but its gains were limited on the outlook for higher supply from South America. On the other hand, economists argue that lower price may prompt China to expand its import, boosting demand for the agricultural commodity. Corn spot price rose from $6.0275 to $6.0450 per bushel today on CBoT.
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Sugar prices declined on the outlook for higher supply from Brazil. Luis Pogetti, chairman of the Copersucar SA, predicted that production will go up to 34 million metric tons in Brazil’s Center South next year. India is also expected to add to the global supply. March contract for delivery of raw sugar fell 1 percent to $0.2321 per pound on ICE after reaching $0.2316 — the lowest level since June 2.
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If you want to learn more about the developments concerning this precious metal, including the supply growth by segments, please refer to the latest report by the World Gold Council:

• Gold Demand Trends Q3 2011

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Zinc was falling in three of the last four years on the London Metal Exchange, showing the worst performance among the six major industrial metals. The slowdown of the global economy contributed to the decline. Another reason for the bad performance was overproduction of the metal.

But market analysts began to view zinc in more favorable light. The rapid economic growth in Asia, particularly China, increase demand for industrial metals. Production of rust-proof steel reached the record high of 31.7 million metric tons in the second quarter of this year, according to estimates of Macquarie Group. About 50 percent of zinc is used to produce the alloy. Morgan Stanley predicted the expected production surplus of 270,000 metric tons in 2011 would fall to 130,000 in 2012. Experts forecast supply to drop as prices fell below production costs of some mines.

There are reasons to be optimistic for zinc, but also there are reasons to be cautious. The world economic recovery is encountering problems and may even falter, at least according to forecasts of most pessimistic economists. Such worries aren’t good for industrial metals. The International Monetary Fund cut its global growth forecasts to 4 percent for 2011 and 2011, compared to the previous estimates of 4.3 percent and 4.5 percent respectively.

Zinc rose today from $94.60 to $95.10 per kilogram on MCX, following the previous advance to the daily high of $96.10.
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Market participants see little point in betting on copper in the face of the expected recession wave that will probably hit both developed and emerging economies. China, the biggest consumer of copper, will likely have to reduce its imports if GDP growth falls short of the government forecast next year.

Copper is currently leading, along with nickel and cotton, the list of the most bearish commodities this year. It was expected before that the lower production numbers will stimulate the price growth for this metal. Now the analysts cut their price forecasts before the London Metal Exchange Week that will be held next Monday and will shed more light on the state of the industry.

Copper COMEX continuous price fell from $323.55 to $315.00 per 100 pounds as of 15:40 GMT today. It reached its daily low at $311.45 — the lowest level since July 2010. This month copper is showing 24.6 percent drop.
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Sugar fell today on the speculation that India will increase exports, causing supply to exceed demand. On the other hand, China and Indonesia are going to expand their purchases of the commodity, potentially supporting prices. October contract for delivery of raw sugar slipped $0.0022 (0.8 percent) to $0.2762 per pound as of 12:24 on ICE.
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From the technical analysis point of view, the decline is finely justified as a correction that followed a sharp rally in July. That rally was induced by the rumors that Brazilian production will decline.

The market analysts point out the fact that the buyers are currently afraid of the tons of supply that may get into the market anytime. If that happens, supply may overwhelm any demand, sending the prices down the hill.

September sugar futures fell from $29.02 to $28.27 per 100 pounds or more than 2.5 percent as of 17:17 GMT on ICE today. It’s the lowest level since July 18.
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Last night, the Democrats and the Republicans reached an agreement regarding the US maximum debt limit, increasing it by $2.1 trillion and deciding to cut the budget deficit by $2.5 trillion during the next decade. While it should be considered a good event for the global markets, the even spurred fear among the investors that the global growth will slow down.

Manufacturing PMI (purchasing managers index), which indicates the industry sentiment, decreased by 4.4 percent in the United States (from 55.3 percent to 50.9 percent), signaling a declining demand for the industrial metals, including copper.

While the labor strikes continue at Chile’s biggest mine Escondida, the 24-hour strike has ended at country’s another mine — Doña Inés de Collahuasi. It accounts for about 3 percent of the global copper production.

Copper futures fell from $449.90 to $440.40 or about 2.1 percent as of 17:31 GMT on COMEX today. The daily low was reached at as low as $437.60 — the lowest level since last Monday.
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