COMMODITIES-Biggest drop in 18 mths; China, Bernanke roil markets

Thu Jun 20, 2013 3:38pm EDT

* China manufacturing survey, Fed stimulus exit plan weigh
    * CRB index down nearly 3 pct, biggest drop since Dec 2011
    * Gold at 2-1/2 year low, crude oil sinks 3 pct
    * Copper at 20-month low; aluminum, nickel multiyear lows
    * Corn, soy and wheat not spared; sugar, coffee tumble

    By Barani Krishnan
    NEW YORK, June 20 (Reuters) - Commodities suffered their
biggest selloff in a year and a half on Thursday as bleak
Chinese data and the U.S. Federal Reserve's plan to reduce its
stimulus efforts hurt the outlook for global growth.
    Gold hit a 2-1/2 year low and oil sank 3 percent. Copper
prices dropped to a 20-month bottom while aluminum and nickel
hit multiyear lows on worries about slowing factory activity in
China, the world's largest buyer of metals.
    Agricultural markets were not spared. Soybeans, corn
 and wheat were all down, and sugar and coffee
 set multiyear lows.  
    A broad rally in the dollar, powered by Fed Chairman
Ben Bernanke's outline on Wednesday of a possible timeline for
the U.S. central bank's winding down of its stimulus, added to
steep declines in commodities denominated in the
greenback. 
    The Thomson Reuters-Jefferies CRB index, a
commodities bellwether that tracks 19 markets, fell nearly 3
percent for its sharpest tumble since December 2011.
    "Today's slide could be one for the history books, at least
in gold," said Edward Meir, an analyst at INTL FC Stone.
    Gold and silver fell to a September 2010 low after Bernanke
said the Fed could start paring $85 billion of monthly bond
purchases later this year. 
    The flood of easy money created by the Fed since the
2008-2009 financial crisis has been integral to rallies in gold
and other commodities. Bernanke indicated the stimulus programs
could stop by mid-2014 if the U.S. economy is strong enough.
    His remarks went far beyond a communique by Fed policymakers
earlier on Wednesday after a two-day meeting, which said the
central bank will continue its bond purchases for now and 
"closely monitor incoming information on economic and financial
developments in coming months." 
    "Once the U.S. Federal Reserve starts to taper the asset
purchases, we are likely to see a stronger U.S. dollar.
Commodities that are priced in the dollar will tend to weaken in
this kind of environment," said Lee Chen Hoay, investment
analyst at Phillip Futures in Singapore. 
    Gold's selloff accelerated after it broke through its April
low of $1,321 an ounce, a key support level, to below $1,282.
    By 1900 GMT, the spot price of bullion was down more
than 5 percent at $1,279.50 an ounce. U.S. gold futures 
for August delivery fell $87.80, or more than 6 percent, to
settle at $1,286.20 an ounce. 
    Oil prices fell by nearly $4 a barrel after a survey of
Chinese manufacturing activity in June heightened the risk of a
sharper slowdown this quarter in the world's second-largest oil
consumer. 
    Benchmark Brent crude oil out of Europe's North Sea 
closed $3.97 a barrel lower at $102.15. In New York, the
front-month contract for U.S. crude settled down $2.84 a
barrel at $95.40. 
    Copper's slide was pressured partly by climbing stockpiles
of the metal at warehouses monitored by the London Metal
Exchange. Inventories are at around 10-year highs, contributing
to the 14-percent drop in prices this year. 
    Copper's benchmark three-month futures contract on the LME
 closed at $6,770 a tonne, down 2 percent from
Wednesday's last bid of $6,960. The session low was $6,750, a
bottom since October 2011.
    
 Prices at 3:01 p.m. EDT (1901 GMT)      
                              LAST/      NET    PCT     YTD
                              CLOSE      CHG    CHG     CHG
 US crude                     94.94    -2.84  -2.9%    3.4%
 Brent crude                 101.91    -4.21  -4.0%   -8.3%
 Natural gas                  3.877   -0.086  -2.2%   15.7%
 
 US gold                    1286.20   -87.80  -6.4%  -23.2%
 Gold                       1280.46   -70.23  -5.2%  -23.5%
 US Copper                     3.06    -0.08  -2.5%  -16.2%
 LME Copper                 6770.00  -190.00  -2.7%  -14.6%
 Dollar                      81.911    0.483   0.6%    6.7%
 CRB                        279.569   -8.388  -2.9%   -5.2%
 
 US corn                     673.25    -9.00  -1.3%   -3.6%
 US soybeans                1497.50   -25.50  -1.7%    5.6%
 US wheat                    700.50    -6.50  -0.9%  -10.0%
 
 US Coffee                   117.65    -5.10  -4.2%  -18.2%
 US Cocoa                   2172.00   -64.00  -2.9%   -2.9%
 US Sugar                     16.38    -0.59  -3.5%  -16.0%
 
 US silver                   19.823   19.607   1.5%  -34.4%
 US platinum                1363.80   -60.10   0.0%  -11.4%
 US palladium                663.55   -31.30  -4.5%   -5.7%
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