Canadian Stocks Fall as Commodities Drop, Suncor Cuts Forecast

Canadian stocks fell the most in more than seven weeks, led by producers of energy, metals and fertilizer, as commodities dropped after China’s central bank signaled it may tighten credit even as growth cools.

Suncor Energy Inc. (SU), Canada’s largest oil and gas producer, declined 5.6 percent after cutting its production forecast. Goldcorp Inc. (G), the world’s second-biggest gold producer, lost 2.9 percent as the metal slumped the most since March 15. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, decreased 3.1 percent as corn futures retreated to the lowest price since March 31.

“Commodities are going through a correction,” said Sebastian van Berkom, a money manager at Van Berkom & Associates in Montreal, which manages C$1.6 billion ($1.7 billion). “China is really starting to try to slow down their economy. That will take some enthusiasm off the commodity market for a while.”

The Standard & Poor’s/TSX Composite Index fell 242.14 points, or 1.7 percent, to 13,692.37, the biggest decline since March 10.

The S&P/TSX dropped 1.9 percent from April 8 to yesterday as the Thomson Reuters/Jefferies CRB Commodity Price Index slipped from a 30-month high. Energy and raw-materials companies make up 49 percent of Canadian stocks by market value, according to Bloomberg data.

Inflation Priority

The People’s Bank of China said in a report today that controlling inflation is its top priority. China raised reserve requirements for its largest lenders to a record 20.5 percent last month.

Crude oil dropped 2.2 percent in New York a day before a U.S. supplies report that analysts estimate will show inventories at a six-month high, according to the median forecast in a Bloomberg survey.

Canadian Natural Resources Ltd. (CNQ), the country’s second- largest energy company by market value, declined 2 percent to C$43.20. Talisman Energy Inc. (TLM), which produces oil and gas in North America, the North Sea and Indonesia, lost 2.4 percent to C$22.43 a day before it is to release first-quarter earnings. Petrominerales Ltd. (PMG), which operates in Colombia, decreased 6.4 percent, the most since September, to C$33.91.

Suncor slumped 5.6 percent, the most in 15 months, to C$41.55 after cutting its 2011 production forecast by 30,000 barrels of oil equivalent a day to a range of 520,000 to 570,000 barrels of oil equivalent a day. In a press release, the company cited the conflict in Libya.

Upgrader Maintenance

Investors may also be concerned oil-sands upgrader maintenance will take longer than the company estimates, Phil Skolnick, an analyst at Canaccord Financial Inc., said in an e- mail message. Suncor said today an upgrader at the Syncrude project will undergo six weeks of maintenance in September and October and work on a second upgrader will take place earlier than previously scheduled.

The S&P/TSX Materials Index tumbled the most in seven weeks. Gold futures slipped 1.1 percent as the U.S. dollar gained the most against the British pound since January.

Silver plunged 7.6 percent, completing the biggest two-day slide since October 2008, after CME Group Inc., the owner of the Comex exchange, raised silver margin requirements for the second time in a week. The requirements specify the minimum amount of cash that must be deposited when borrowing from brokers to trade silver futures.

Goldcorp dropped 2.9 percent to C$48.69 after sinking 5.2 percent yesterday. Eldorado Gold Corp. (ELD), Canada’s fifth-largest gold producer by market value, declined 7.4 percent, the most since June 2009, to C$15.98. China Gold International Resources Corp., which explores for gold in China, tumbled 6.6 percent to a seven-month low of C$4.28.

Corn Declines

Potash Corp. and Agrium Inc. (AGU) slumped to 2011 lows as corn futures retreated after exchange data showed that Archer Daniels Midland Co., the largest grain processor, delivered 1.96 million bushels of corn against expiring May futures. Potash Corp. lost 3.1 percent to C$51.46. Agrium, a fertilizer producer and agricultural-products retailer, decreased 2.9 percent to C$83.55.

Thirteen of 16 base-metals and coal producers in the S&P/TSX dropped. China is the world’s largest user of industrial metals.

First Quantum Minerals Ltd. (FM), Canada’s second-largest publicly traded copper producer, declined 3.1 percent to C$129.92. Teck Resources Ltd. (TCK/B), the country’s biggest base-metals and coal producer, lost 2.7 percent to C$50.47. Northern Dynasty Minerals Ltd. (NDM), Anglo American Plc’s partner in the Pebble project in Alaska, sank 4.7 percent to C$12.52.

Canada’s eight-largest banks and three biggest insurers each retreated.

Manulife Financial Corp. (MFC), North America’s fourth-largest insurer, decreased 4 percent to C$16.80 two days before it is to release first-quarter financial results. In a note to clients dated yesterday, Joanne Smith, an analyst at Bank of Nova Scotia, reduced her 2011 earnings forecast for the company, citing the March earthquake in Japan.

To contact the reporter on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net.

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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