Glencore Readies IPO, While Cotton Prices Predicted to Fall (XSRAY, LIZ, WMT, JCP, GPS, PKX, BP, RDS-A, XOM, CVX, COP, BRGYY, BHP)

Time now for our daily look at commodity prices and news. Swiss-based commodities trading house Glencore International AG is expected to conduct an IPO on the Hong Kong exchange around the end of April. The company aims to raise $10 billion with this offering and one in London. The IPO has been rumored for some time, but difficulty in valuing the company’s assets has drawn out the process.

Glencore’s 2010 revenues totaled $145 billion and profits came in at $3.75 billion. Glencore owns 34.5% of mining company Xstrata PLC (OTC: XSRAY).

Bloomberg is reporting that analysts it has surveyed expect cotton prices to fall by half by the end of this year. [http://www.bloomberg.com/news/2011-03-27/cotton-rally-peaking-as-record-crop-means-first-stockpile-gain-since-2007.html] The reason for the drop is increased planting by cotton growers in the US, Australia, and elsewhere. Lower demand for clothing in the wake of higher food and gasoline prices will also work against the price.

Bad weather or other external forces could cause the price to jump as high as $2.30/pound by June, from about $1.97 today. Clothing makers like Liz Claiborne, Inc. (NYSE: LIZ) and retailers like Wal-Mart Stores, Inc. (NYSE: WMT), J.C. Penney Co. (NYSE: JCP) and Gap Inc. (NYSE: GPS) are all facing pressure on margins from the higher cotton prices.

Copper prices have fallen as traders worry that demand may slacken as Japanese carmakers struggle to re-start production. The possibility that radiation contamination in the area around the leaking reactors could delay rebuilding or, in the worst case, make the area completely uninhabitable.

Even if that turns out to be the case, the people dislocated would need to have housing somewhere else, so the demand for copper might slow a little, but it won’t disappear. Copper demand should continue at very high levels. The gap is currently about 400,000 metric tons annually, according to The Wall Street Journal.

Korean steelmaker Posco (NYSE: PKX) plans to raise prices on some of its steel products by as much as 20% early next month due to rising costs, particularly for iron ore.

Global oil companies stayed away from both onshore and offshore blocks in an auction held by India’s government. BP plc (NYSE: BP), Royal Dutch Shell plc (NYSE: RDS-A), Exxon Mobil Corp. (NYSE: XOM), Chevron Corp. (NYSE: CVX), and ConocoPhillips Corp. (NYSE: COP) did not participate, while BG Group plc (OTC: BRGYY) and BHP Billiton plc (NYSE: BHP) combined to make just one bid. An uncertain regulatory climate got most of the blame for the non-competitiveness of the auction.

Paul Ausick