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Tuesday 13 January 2009
Commodities Tumble as Recession Erodes Grain, Energy Demand
The Reuters/Jefferies CRB Index of 19 prices slid 4.1 percent. Corn, soybeans and wheat plunged the most allowed by the Chicago Board of Trade, crude oil fell below $38 a barrel and gold declined the most in six weeks.
Commodities Tumble as Recession Erodes Grain, Energy Demand
By Millie Munshi 12 January 2009
(Bloomberg) -- Commodity prices tumbled, led by grains and energy, as the slumping global economy continued to slash demand for raw materials.
The Reuters/Jefferies CRB Index of 19 prices slid 4.1 percent. Corn, soybeans and wheat plunged the most allowed by the Chicago Board of Trade, crude oil fell below $38 a barrel and gold declined the most in six weeks.
In 2008, the CRB index plummeted 36 percent, the most since the gauge debuted five decades ago, as the U.S., Europe and Japan entered recessions. Today, the U.S. Department of Agriculture projected bigger supplies of grain and oilseeds than estimated last month. Oil consumption will drop by 1 million barrels a day this year, Deutsche Bank AG said last week.
“The continued deflationary environment and economic slowdown is driving down potential demand for all the commodities,” said Michael Cuggino, who oversees about $3.5 billion as chief executive officer of Pacific Heights Asset Management in San Francisco. “The drop in commodities is a symptom of a very negative period for the global economy.”
The CRB index fell 9.36 to 220.55 with only natural gas posting a gain. On Dec. 5, the gauge touched 208.58, the lowest since August 2002.
Crude-oil futures for February delivery dropped $3.24, or 7.9 percent, to $37.59 a barrel on the New York Mercantile Exchange. Earlier, the price touched $37.48.
“With global economic activity on a freefall and unemployment rising, the outlook for energy commodities remains rather grim,” Francisco Blanch, the head of global commodities research at Merrill Lynch in London, said today in a note. “Energy markets will remain closely linked to real economic activity, and a near-term rebound in prices is unlikely.”
Corn, Soybeans Plunge
Corn futures for March delivery fell by the limit of 30 cents, or 7.3 percent, to $3.8075 a bushel on the CBOT.
Wheat futures for March delivery tumbled 59.75 cents, or 9.5 percent, to $5.6975. Earlier, the price fell by the maximum of 60 cents.
Soybean futures for March delivery plunged by the limit of 70 cents, or 6.8 percent, to $9.66 a bushel.
Global corn supplies may jump to 136 million metric tons in the year ending Sept. 30, the USDA said today. The projection was up 9.9 percent from a December forecast. U.S. soybean stockpiles before the next harvest will reach 6.1 million tons, up from 5.6 million projected a month ago, the USDA said. World wheat inventories may rise 0.7 percent.
“People are taking another look at commodities and seeing limited upside,” said Stephen Platt, a commodity analyst at Archer Financial Services Inc. in Chicago. “A lot is tied to the disappointing outlook for the domestic and world economy. The agriculture reports show stocks building, highlighting the lack of demand, and that helped drive everything else down.”
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Commodities Tumble as Recession Erodes Grain, Energy Demand
By Millie Munshi
12 January 2009
(Bloomberg) -- Commodity prices tumbled, led by grains and energy, as the slumping global economy continued to slash demand for raw materials.
The Reuters/Jefferies CRB Index of 19 prices slid 4.1 percent. Corn, soybeans and wheat plunged the most allowed by the Chicago Board of Trade, crude oil fell below $38 a barrel and gold declined the most in six weeks.
In 2008, the CRB index plummeted 36 percent, the most since the gauge debuted five decades ago, as the U.S., Europe and Japan entered recessions. Today, the U.S. Department of Agriculture projected bigger supplies of grain and oilseeds than estimated last month. Oil consumption will drop by 1 million barrels a day this year, Deutsche Bank AG said last week.
“The continued deflationary environment and economic slowdown is driving down potential demand for all the commodities,” said Michael Cuggino, who oversees about $3.5 billion as chief executive officer of Pacific Heights Asset Management in San Francisco. “The drop in commodities is a symptom of a very negative period for the global economy.”
The CRB index fell 9.36 to 220.55 with only natural gas posting a gain. On Dec. 5, the gauge touched 208.58, the lowest since August 2002.
Crude-oil futures for February delivery dropped $3.24, or 7.9 percent, to $37.59 a barrel on the New York Mercantile Exchange. Earlier, the price touched $37.48.
“With global economic activity on a freefall and unemployment rising, the outlook for energy commodities remains rather grim,” Francisco Blanch, the head of global commodities research at Merrill Lynch in London, said today in a note. “Energy markets will remain closely linked to real economic activity, and a near-term rebound in prices is unlikely.”
Corn, Soybeans Plunge
Corn futures for March delivery fell by the limit of 30 cents, or 7.3 percent, to $3.8075 a bushel on the CBOT.
Wheat futures for March delivery tumbled 59.75 cents, or 9.5 percent, to $5.6975. Earlier, the price fell by the maximum of 60 cents.
Soybean futures for March delivery plunged by the limit of 70 cents, or 6.8 percent, to $9.66 a bushel.
Global corn supplies may jump to 136 million metric tons in the year ending Sept. 30, the USDA said today. The projection was up 9.9 percent from a December forecast. U.S. soybean stockpiles before the next harvest will reach 6.1 million tons, up from 5.6 million projected a month ago, the USDA said. World wheat inventories may rise 0.7 percent.
“People are taking another look at commodities and seeing limited upside,” said Stephen Platt, a commodity analyst at Archer Financial Services Inc. in Chicago. “A lot is tied to the disappointing outlook for the domestic and world economy. The agriculture reports show stocks building, highlighting the lack of demand, and that helped drive everything else down.”
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