BLBG: Commodities Prices Drop the Most in Week as China May Raise Interest Rates
Commodities fell the most in a week on speculation China is getting closer to raising interest rates, curbing demand for raw materials.
The S&P GSCI spot index of 24 commodities declined as much as 1.1 percent, the most since Nov. 30, and was down 2.57 points, or 0.4 percent, at 604.57 by 10:49 a.m. in London. Cotton slid 2.6 percent and zinc dropped 2.1 percent. The index has gained 15 percent this year as economic growth spurred demand in China, the world’s largest energy user and biggest buyer of copper, cotton and soybeans.
China’s statistics bureau brought forward the release of November economic data including inflation and retail sales to Dec. 11, heightening speculation the central bank will raise interest rates this weekend. The GSCI index fell 1.7 percent after China announced higher rates on Oct. 21. Copper and gold rose to records yesterday.
“Should interest rates actually be raised and measures to dampen the economy be introduced, metal prices would most probably remain under pressure for a while,” Commerzbank AG said in an e-mailed report today. “Investors are clearly taking profits after the latest high-altitude flight.”
Copper for delivery in three months slid as much as 2 percent on the London Metal Exchange, the first drop since Nov. 29, and was last down 0.4 percent at $8,845 a metric ton. It reached $9,044 yesterday. Gold for immediate delivery, which yesterday touched $1,431.25 an ounce, today fell 0.4 percent to $1,396.18.
Chinese Lending
Loans in China may have topped the government’s forecast of 7.5 trillion yuan ($1.1 trillion) by the end of November, which “has led to expectations that China could implement further measures to cool the local economy,” Commerzbank said.
“The biggest risk to the market now is the prospect of an interest-rate hike in China,” said Fang Junfeng, an analyst at China International Futures (Shanghai) Co.
Among agricultural commodities, wheat plunged 1.9 percent to $7.70 a bushel on the Chicago Board of Trade, soybeans dropped 0.8 percent to $12.7575 a bushel and corn fell 0.7 percent to $5.58 a bushel. Lower closes today for soybeans and corn would mark the third straight decline for both.
Rice tumbled 3.2 percent to $13.71 per 100 pounds in Chicago and cocoa slid 1.1 percent to $3,049 a ton on ICE Futures U.S. in New York.
To contact the reporters on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net; Tony C. Dreibus in London at tdreibus@bloomberg.net.
To contact the editor responsible for this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net
