Tags: Commodity | Prices | Copper | Hogs

Commodity Prices Sink to 5-Year Low Led by Copper, Hogs

Wednesday, 15 October 2014 06:09 PM

Commodity prices dropped to a five-year low Wednesday on growing concern that slower economic growth will cool demand in China, the world's top consumer of metals, grains and energy.

The Bloomberg Commodity Index of 22 raw materials fell as much as much as 1.3 percent  to the lowest since July 2009. Copper futures dropped by the most since March on the Comex, while hog prices posted the biggest loss in 25 months.

Raw materials slumped 7 percent this year, headed for a fourth annual decline and the longest slump since at least 1991, amid concern that economic growth is weakening as global equity markets lost $1.5 trillion last week. A stronger dollar has curbed demand for commodities as alternative assets.

“You’ve had a continuation of the stronger dollar trend,” said Ted Harper, senior fund manager who helps manage more than $10 billion for Frost Investment Advisors LLC in Houston. “We also have growing concerns about slowing growth, at the margins domestically, but also in Asia and Europe.”

The BCOM Index dropped 1.2 percent to settle at 116.9992 Wednesday in New York, the biggest decline since Sept. 30. Copper futures for December delivery tumbled 2.6 percent to $3.009 a pound on the Comex, the largest retreat since March 11.

Chinese consumer costs in September rose at the slowest pace since January 2010, and U.S. wholesale prices unexpectedly fell for the first time in a year, separate reports showed Wednesday. American retail sales dropped more than forecast in September, Commerce Department data show.

Expanding Gluts

Commodities tumbled 12 percent in the third quarter, the most since the last three months of 2008. Expanding surpluses, a surging dollar and slowing global growth helped drive prices lower, reversing first-half gains fueled by a polar vortex and dead pigs in the U.S., and escalating tensions in Ukraine and the Middle East. China is poised for its slowest expansion in two decades, analysts forecast.

“It is clear the positive momentum seen in this sector over the last 12 months has faded,” Jim Lennon, senior commodities consultant at Macquarie Group Ltd., said in a report e-mailed Wednesday. “Output from the world’s factories, mines and power stations shrank in August, a poor backdrop for commodities demand.”

Oil is languishing in a bear market, with the International Energy Agency predicting the lowest demand growth since 2009. Brent crude settled yesterday at $83.78 a barrel on the London-based ICE Futures Europe exchange, the lowest close since Nov. 23, 2010. The Organization of Petroleum Exporting Countries boosted output in September to the highest in 13 months.

“Oil prices are struggling to find a floor, as the market contemplates the possibility that OPEC may be happy to let prices fall,” Nic Brown, head of commodities research at Natixis SA in London, said by e-mail.

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Commodity prices dropped to a five-year low Wednesday on growing concern that slower economic growth will cool demand in China, the world's top consumer of metals, grains and energy.
Commodity, Prices, Copper, Hogs
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2014-09-15
Wednesday, 15 October 2014 06:09 PM
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