London, 6 August 2011

Barclays Capital Commodities Research Rankings: Concerns over slowing growth in the USA and China, plus ongoing European debt problems, have the potential to continue as the main commodity price drivers over the next month irrespective of individual market fundamentals, according to Barclays Capital. Consequently, they have altered their rankings to allow for defensive overweight positions in precious metals and grains and are underweight in energy, base metals and softs.

"Within precious metals we are heavily overweight gold, have a marginal overweight in silver but are underweight the PGMs which are likely to be vulnerable to economic growth concerns. In agriculture we are overweight corn where we expect prices to be supported by the potential for further downgrades to US yields this month."

In base metals BarCap are positioning for a period of weakness so now are overweight aluminium where price downside is limited by the proximity of prices to production costs. However, BarCap have reduced their overweight in copper where prices are likely to underperform in the quiet summer period, before Chinese buyers return in Q4.

"In energy the recent large price declines in carbon and US natural gas mean these markets now look much better value relative to their fundamentals and we have raised their rankings. Meanwhile, we see a slightly weaker outlook for crude oil and product markets and have reduced our rankings somewhat. As a result, individual market weights across the energy sector are now much closer to their benchmark values compared with last month’s overweighting of crude oil markets."

In the past month the BCRI has outperformed the neutral portfolio by around 30bp. "This was due mainly to last month’s underweighting of US natural gas and carbon, which were among the weakest of all the commodity markets, and our overweighting of corn, which was one of the strongest," say BarCap.

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More information at www.barcap.com