Bloomberg News

Commodities Fall to One-Week Low as Europe Debt Concerns Deepen

September 06, 2011

Sept. 6 (Bloomberg) -- Commodities fell to the lowest level in more than a week on deepening concern the European sovereign debt crisis may further slow global economic growth, damping demand for raw materials. Gold fell from a record in London after the Swiss central bank set a minimum exchange rate.

The Standard & Poor’s GSCI Index dropped as much as 2.1 percent to 647.88, the lowest intraday level since Aug. 26, and was down 2 percent at 648.46 by 1:58 p.m. in London. Crude oil fell as much as 3.8 percent in New York. The S&P index has retreated 3.1 percent in the second half, as manufacturing activity slowed in the U.S., Europe and Asia.

“Commodity markets remain beset by concerns over global growth and the risks of sliding into another recession, with the situation made worse by the lack of any solution to Europe’s sovereign debt crisis,” Kevin Norrish, an analyst at Barclays Capital in London, wrote today in a report.

Corn, wheat and soybeans fell in Chicago on concern demand is set to wane as Europe’s sovereign-debt crisis worsens, denting the outlook for the global economy. December-delivery corn dropped 5.75 cents, or 0.8 percent, to $7.5425 a bushel on the Chicago Board of Trade. Wheat for December delivery slid 9 cents, or 1.2 percent, to $7.665 a bushel. Soybeans for November delivery fell 17.75 cents, or 1.2 percent, to $14.28 a bushel in Chicago.

“The Greek debt crisis seems insolvable, and the troubles on the equity markets should weigh equally on the commodities sector,” Paris-based farm adviser Agritel said in a daily online report.

Gold Drops

Gold for immediate delivery gained as much as 1.1 percent to a record $1,921.15 an ounce, before falling on speculation the Swiss central bank’s move to impose a ceiling on the franc’s exchange rate will cut demand for the metal as an alternative to assets including equities. Immediate-delivery gold traded down 0.3 percent at $1,894.80 in London. It fell as much as 2 percent after the Swiss announcement.

The franc fell the most since the creation of the euro after the Swiss central bank set a minimum exchange rate against the 17-nation currency. European stocks declined a third day, while U.S. stock futures retreated.

Coffee’s Losing Streak

Coffee fell for a sixth day, the longest losing streak since July in London, on expectations of a record crop in Vietnam and increasing supplies from Latin America. Robusta coffee for November delivery slid $26, or 1.2 percent, to $2,168 a ton on NYSE Liffe in London. Arabica coffee for December delivery fell 8.35 cents, or 2.9 percent, to $2.797 a pound on ICE Futures U.S. in New York.

Crude oil for October delivery was down 3.1 percent at $83.81 a barrel on the New York Mercantile Exchange, after dropping to as low as $83.20 earlier today.

Chief Executive Officer Josef Ackermann of Deutsche Bank AG said yesterday market conditions reminded him of the financial crisis in late 2008. The collapse of Lehman Brothers Holdings Inc. in September of 2008 froze credit markets and forced taxpayer-funded bailouts of banks from Washington and London to Berlin.

--Editor: John Deane

-0- Sep/06/2011 13:19 GMT

To contact the reporter on this story: Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net


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