Commodities Plunge as Recession Curbs Demand for Raw Materials
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By Whitney McFerron
Jan. 27 (Bloomberg) -- Commodity prices tumbled the most in two weeks as the global recession eroded demand for energy, metals and grains.
The Reuters/Jeffries CRB Index of 19 raw materials fell 3.7 percent, the most since Jan. 12. Crude oil plummeted more than 9 percent, copper plunged the most in seven weeks, and corn declined 4.1 percent. Only cocoa and silver posted gains.
U.S. consumer confidence in January sagged to the lowest level ever, and the drop in house prices in major metropolitan areas deepened in November. State figures released today showed the unemployment rate jumped in all 50 states in December.
“It’s a grim picture for commodities,” said Chip Hanlon, who helps oversee $1.5 billion at Delta Global Advisors in Huntington Beach, California. “Demand is just so slack now. That’s reasonable considering how dire the economy is. This environment may persist for a while.”
The CRB index fell 8.41 to 218.76 today. The gauge is down 4.7 percent this month after plunging 36 percent in 2008, the most since debuting five decades ago.
Crude-oil futures for March delivery fell $4.15, or 9.1 percent, to $41.58 a barrel on the New York Mercantile Exchange. Prices are down 6.8 percent this month and are 54 percent lower than a year ago.
The Energy Department may say tomorrow that the nation’s crude-oil inventories rose for the 16th time in 18 weeks, according to the median of analyst estimates in a Bloomberg News survey.
Copper Drops
Copper futures for March delivery tumbled 10.2 cents, or 6.4 percent, to $1.4845 a pound on the Comex division of the Nymex, the biggest drop for a most-active contract since Dec. 5.
Stockpiles in warehouses monitored by the London Metal Exchange jumped 2.8 percent today to 451,800 metric tons, the most in five years. Since June 30, supplies have more than tripled, helping to drive prices down by 62 percent.
“Things really need to start to fall into place for the economy before we can start to see any real kind of turnaround for copper,” said Michael Gross, an OptionSellers.com analyst in Tampa, Florida. “Prices will continue to languish.”
Corn futures for March delivery fell 16.25 cents to $3.775 a bushel on the Chicago Board of Trade, the biggest drop for a most-active contract since Jan. 13. The price has plunged 53 percent since reaching a record $7.9925 on June 27.
“You don’t know when the economy is going to recover because the domino effect is still happening and job losses will continue,” said Roy Huckabay, an executive vice president at the Linn Group in Chicago.
To contact the reporter on this story: Whitney McFerron in Chicago at wmcferron1@bloomberg.net. |
