Commodities fell to the lowest in a week, led by copper’s drop to a nine-month low, on speculation that demand for raw materials would decline after European policymakers failed to introduce a plan to stem the region’s debt crisis. Gold gained.
Industrial users of metals and energy and companies that use agriculture commodities to make food may slow their purchases, waiting for a solution to the euro crisis. International monitors this week will assess whether Greece can meet the conditions of rescue loans and avoid default.
“People are waiting on the sidelines to see if prices get cheaper,” said Gary Mead, an analyst at VM Group in London. “Industrial and end-users and consumers in the wholesale sense are in a wait-and-see mode. It’s clearly the fact that there’s no decision on the table for the end of the euro crisis. There’s a tremendous amount of fear out there.”
Standard & Poor’s GSCI Spot Index shed as much as one per cent to 645.79, the lowest level since September 12, extending last week’s one per cent loss. Copper for three-month delivery declined 3.6 per cent to $8,386 a metric ton on the London Metal Exchange by 10.43 am local time, the lowest price since December 1. Crude oil for November delivery shed as much as 1.9 per cent to $86.54 per barrel in New York. Gold increased as much as 0.9 per cent to $1,828.74 an ounce.
MINE STRIKES
Copper had been supported by strikes at Freeport-McMoRan Copper & Gold Inc’s mines in Indonesia and Peru. Freeport resumed mining at its Grasberg mine over the weekend, as 1,500 workers returned to the site in Indonesia’s Papua province. Miners in Peru may strike again on September 27, a union official said, after they returned to their jobs this weekend ending a four-day work stoppage.
The S&P GSCI Spot Index has tumbled four per cent this month, extending the 1.7 per cent loss in August. Concerns that there may be an economic slowdown in the euro zone and the US have outweighed the effects of constrained supplies of crude and copper. A report this week may show US home construction dropped to a three-month low.
Finance chiefs from the euro region said last week the 18-month debt crisis leaves no room for tax cuts or extra spending to spur an economy on the brink of stagnation. Reports this week are forecast to show a decline in German investor confidence and a slowdown in manufacturing in Europe’s largest economy.
GLOBAL TRACTION
Money managers cut their net-long positions in 18 commodities by 5.2 per cent to 1.21 million futures and options contracts in the week ended September 13, government data compiled by Bloomberg show. That was the first drop since early August.
“People are fearful of global contraction, based on everything that’s going on in Europe,” said Jeffrey Sherman, who helps manage $16 billion for DoubleLine Capital in Los Angeles. “It’s a risk-off type of trade.”
Crude oil for November fell $1.25, or 1.4 per cent, to $86.93 a barrel on the New York Mercantile Exchange.
Gold for immediate delivery climbed 0.3 per cent to $1,816.8 an ounce. December-delivery bullion advanced for a second day, rising 0.3 per cent to $1,819.3 an ounce.
“Precious metals were higher as uncertainty regarding the euro zone debt crisis rose again,” Citigroup Inc analysts including David Thurtell wrote in a note.
December-delivery corn lost 1.1 per cent to $6.8475 a bushel on the Chicago Board of Trade. Wheat for December delivery slipped 7.25 cents, or 1.1 per cent, to $6.81 a bushel and soybeans for November delivery fell 11.25 cents, or 0.8 per cent, to $13.4425 a bushel.
