A bad week for commodities last week which helped on Friday to hit some sectors of the US stockmarket during the day of wild swings.
London was also hurt as resource and energy stocks took a pounding off the back of a tanking oil price and gold and copper weakening on the week and/or the day.
Oil fell below $US78 for the first time in a year and copper capped its biggest weekly drop in more than two decades on concern that the credit freeze and turmoil is pushing the world economy into recession.
Oil in New York dropped 17% last week, the biggest one-week decline since March 2003 when the second Iraq war started.
All commodities with the exception of coffee were down on signs that demand for raw materials will drop as the global economy falters. (Was coffee boosted by all those late nights in banks, governments and central banks and investors?)
Nymex November crude fell $US8.89, or 10% to $US77.70 a barrel in New York on Friday, the lowest close since early September, 2007. Prices are now down 47% from the record $US147.27 a barrel reached on July 11.
The Reuters/Jefferies CRB Index of 19 commodities had the biggest drop since at least 1956 on Friday (it wasn’t just the stockmarket!). The CRB fell 20.64 to 289.89, the lowest since January last year.
The index has slumped 39% from a record on July 3 and 20% over the last two weeks.
December copper on Comex had a rougher day Friday than oil: It fell 26.15 USc or 11%, to $US2.1445. That was down 20% over the week, the most since 1988, when data started.
Copper touched a low Friday of $US2.05, the lowest since January 2006.
Last week’s 20% fall took the drop for the past fortnight to 33% and copper has now lost half of its value since touching a record $US4.2605 a pound on May 5.
Gold tumbled Friday as investors even sold that to get cash for the weekend and the mooted meetings of officials and governments around the world and possible bank bail-outs.
Silver plunged 11% on Friday as well.
Gold reached $US936.30 an ounce, the highest since July 29, on demand for a safe haven and then reversed. .
Comex December gold fell $US27.50, or 3.1% percent, to $859. (The metal reached a record $US1,033.90 on March 17). Gold still ended up 6.6% for the week.
Silver futures for December delivery dropped $US1.275 to $US10.60 an ounce, and is now down 29% this year.
Corn and soybeans fell the exchange limits in Chicago and wheat dropped to a 16-month low after the US department of Agriculture sprang a big surprise by forecasting rising inventories and harvests.
As well the global financial pressures saw more speculative interest leave the commodity markets and much of the activity was cut back to basic hedging as the credit freeze restricts the amount of business traders can do.
The US Department of Agriculture unexpectedly raised its estimate of the corn and soybean crops and said global wheat inventories will jump 21% after record prices encouraged farmers to plant more this year in America and around the world (although the size of the Australian crop is still unclear with more dry weather).
CBOT December corn futures fell the exchange maximum of 30USc, or 6.8%, to $US4.0825 a bushel. Corn fell 10% last week. It’s off 26% in the past fortnight.
The price is 49% under the record $US7.9925 on June 27.
November soybean futures fell the 70USc limit, or 7.1% to $US9.10 a bushel in Chicago, the lowest since September last year. The price fell 8.3% last week and 22% over two weeks. Soybeans are down 44% from a record $US16.3675 a bushel on July 3.
December wheat fell 41.25 USc, or 6.8% Friday to $US5.635 a bushel in Chicago. The price fell 12% last week, the most since March. Wheat prices are 58% below the all time high of $US13.495 set in late February.
And in a sign of the impact the slowing global economy (especially in the US, Japan, Europe and the UK), the International Energy Agency Friday chopped its forecast for global oil demand in 2009 by 0.5%, or 440,000 barrels of oil a day to 8.7 million barrels.
Fuel demand in the US continues to fall sharply and in the four weeks to early this month, was down a huge 8.6% on the same period of 2007.
Opec has called an emergency meeting in November, prompting speculation that it will cut output to stem the fall in oil prices.
In London, ICE November Brent sank to $US75.00 a barrel, its lowest level since September 2007, and at $US76.66 in after hours trading for a fall of 15% last week..
On the London Metal Exchange, copper fell 19.5% over the week to $US4,840 a tonne. Traders said it was the worst weekly performance since the benchmark LME contract started trading. It’s now at levels in London last seen in early 2006.
On the week, nickel lost 20.1% to $US12,100 a tonne; lead 14% to $1,480 a tonne; tin 18.5% to $US13,850 a tonne; zinc 9.7% to $US1,440 a tonne and aluminium 4.7% to $US2,230 a tonne.
The Baltic Dry Index, which measures the cost of shipping bulk commodities such as iron ore, grains or cement fell more than 11% on Friday, the biggest daily drop on record, thanks to expectations of a sharper than expected slump in demand for commodities in 2009.
It fell 26% over the week.
