Commodities plummet on falling crude oil prices
By STEVENSON JACOBS, AP Business Writer
Tuesday, August 5, 2008 4:45 PM CDT
NEW YORK 8/04/08 - Commodities fell sharply Monday as another big drop in crude prices prompted traders to shed copper, corn and other hard assets as alternative investments.
Crude tumbled as much as $5 a barrel during the day on a host of bearish news items, chief among those investors’ belief that Tropical Storm Edouard wouldn’t damage oil and natural gas facilities in the Gulf of Mexico.
Corn futures sank to their lowest level in more than four months as traders who bought the grain as an inflation hedge began unloading their positions.
Corn for December delivery 29.5 cents to settle at $5.555 a bushel on Chicago Board of Trade, the lowest settlement price since March 24. The contract has plunged 30 percent from June highs reached after floods devastated parts of the Midwest, driven lower in recent weeks by warm, dry weather that has reinvigorated crops.
Crude’s decline Monday “encouraged more selling in the grains, not that any encouragement is needed,” Vic Lespinasse, of Grainanalayst.com, said in a note.
Other grains also traded lower. Soybeans for November delivery dropped the maximum 70-cent limit to settle at $12.95 a bushel on the CBOT, while September wheat lost 35.25 cents to settle at $7.5875 a bushel.
Oil initially turned lower after the Commerce Department reported that consumer spending fell in June as shoppers dealt with higher prices for gasoline, food and other items. That bolstered analysts’ arguments that a U.S. economic slowdown is forcing Americans to scale back on energy use.
Light, sweet crude for September delivery fell $3.69, or 2.9 percent, to settle at $121.41 a barrel on the New York Mercantile Exchange. Earlier, prices plummeted more than $5 to $119.50, the lowest level since May 6. Crude has now fallen in six of the last nine sessions and has fallen 18 percent from its trading record of $147.27 reached July 11.
Other energy futures also fell. Gasoline futures fell 8.41 cents to settle at $3.0002 a gallon on the Nymex, while heating oil futures fell 8.67 cents to settle at $3.3501 a gallon.
The dollar was mixed against major currencies Monday, limiting the appeal of commodities as a hedge against inflation and weakness in the U.S. currency.
In precious metals, gold for December delivery lost $9.60 to settle at $907.90 an ounce on the New York Mercantile Exchange, after earlier falling as low as $902.10.
Other precious metals also traded lower. September copper fell 13.85 cents, or 3.88 percent, to $3.44 an ounce on the Nymex, while September silver dropped 38 cents, or 2.16 percent, to settle at $17.14 an ounce on the Nymex.
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