MORNING CALL: CRUDE 111.22 +0.51%; COTTON 97.01 -0.53%; BDI 926 -4.93%

Asian markets for commodities were supported by the announcement that the IMF is to hike its lending facility by $500bn, sparking a decline in the dollar versus the Euro.

Meanwhile sentiment was also buoyed by the announcement earlier in the day that Chinese 2011Q4 GDP came in stronger than expected at 8.9%.

In cotton markets, news that China’s cotton planting area is expected to fall by 10.5% in 2012 supported prices earlier in the session before the market gave up the earlier gains.

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Base metal price forecasts revised down, copper likely to shine

The last two weeks have coincided with a flurry of base metal forecasts for the year ahead from the commodity research departments of investment banks. Goldman Sachs, Barcap and Morgan Stanley all lowered their forecasts for aluminium prices in 2012 due to increased supplies but argued that growth in the US and China will offset weakness in Europe so that prices will average around $2300 per tonne for the year. As of this morning LME aluminium was trading around $2200 per tonne.

While there was general consensus regarding average 2012 aluminium prices there was a much greater divergence of opinions regarding the outlook for copper. Morgan Stanley forecast average 2012 copper prices at $8157 per tonne, Goldman Sachs at $8567 per tonne and Barcap at $9000 per tonne. All banks cited excess demand over supply as being supportive of copper prices (Goldman Sachs expects a shortage of 202,000 tonnes in 2012 against 198,000 tonnes in 2011) while Morgan Stanley argues that dollar strengthening will weaken demand for commodities in general including copper. Copper currently trading around $8300 per tonne.

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MORNING CALL: CRUDE 112.10 +0.51%; COTTON 97.53 -0.68%; BDI 974 -3.85%

Brent crude prices rose during Asian trading after Iran cautioned Saudi Arabia against increasing crude supplies in the event that sanctions are imposed against Iranian oil exports. Watch out for the release of US crude inventory estimates tomorrow (Thursday) which should show a 3 million barrel increase in crude inventories, according to a Bloomberg poll.

The Baltic Dry Index continued its daily decline on increased ship availability and lower commodity demand, down over 50% in the past month.

Meanwhile the World Bank published its latest forecast for 2012 and 2013 revising global GDP growth down to 2.5% and 3.1% respectively, while warning emerging economies to prepare for a sharp slowdown.

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