by Agrimoney.com
Glencore, unveiling a valuation of up to $58bn from its stockmarket float, trumpeted prospects for commodities markets even as many investors wavered, depressing prices of many raw materials as well as shares in sector operators.
The world's biggest diversified commodities trader said that the "strong conditions" seen on commodity markets in the first three months of the year were "continuing into the second quarter".
"Despite recent events in Japan and the Middle East, the directors remain confident that economic activity and commodity demand remain robust, and that Glencore remains well-positioned for the remained of 2011," the company said.
However, the comments came as commodities continued a soft performance which has seen silver tumble 16% in three days and, in agricultural commodities, corn fall to its lowest levels since late March, amid fears for the impact of tighter monetary policy on demand for raw materials.
New York sugar on Tuesday gained for only the fourth session since April 5.
'Rising risk aversion'
"The market environment remains one of rising risk aversion, with commodities facing the brunt of pressure," Crédit Agricole said, in comments which followed warnings too from Goldman Sachs and Societe Generale over weaker prospects for raw material prices.
At grain broker Benson Quinn Commodities, Jon Michalscheck said: "Last week there was talk that a few of the larger hedge funds were going to exit their commodity positions including grain and take their money elsewhere to play and maybe that is exactly what is taking place as we begin the new trading month."
Prices of shares in many groups linked to raw material sectors have also lost ground, with BHP Billiton following up losses in Sydney by opening 1.2% lower in London, and Rio Tinto stock shedding 1.9%.
Among farm-related companies, shares in German potash group fell 1.1%, following declines of some 3% in peers such as Canada's Agco and PotashCorp, US-based Mosaic and Australia's Incitec Pivot.
Agribusiness giant Archer Daniels Midland stock lost nearly 7% on Tuesday after results from its agricultural trading division fell short of market expectations.
Dividend pledge
However, Glencore said that its own marketing operations had started the year "strongly", particularly in oil, where "market volatility and tighter supply conditions" and "increased arbitrage opportunities".
The group's industrial activities, such as mining, had "delivered a substantially improved performance over the first quarter of 2011", thanks to raised commodity prices and production increases.
The group restated a pledge to declare an interim dividend of $350m in August, when it will publish its first results, for the half year, as a listed company.
'Strong investor interest'
Glencore revealed a price range of 480p-580p for its shares, which are expected to begin trading in London and Hong Kong later in the month. The final price will be set on May 19.
At the mid-point of the range, the flotation values the company at some £36.5bn, or $61bn.
Ivan Glasenberg, the Glencore chief executive, said the group had been "pleased by the strong investor interest shown in Glencore's unique commodity business model", with 12 so-called "cornerstone" investors agreeing to buy $3.1bn of stock.
These include US fund manager BlackRock, Swiss banks Credit Suisse and UBS, and hedge fund Och-Ziff Capital Management.
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