Commodities had their biggest monthly drop in 13 months in January as the sell-off that started almost two weeks ago, gathered pace late last week.
Driving the sell-off have been fears about China’s growth and monetary policy, India’s surging inflation and growth, Greece’s solvency and concern about new regulations hitting banks that might limit speculative investment in commodities.
The turnaround has come as the US dollar has recovered its strength on these emerging concerns.
On Friday it hit a six month high against the euro of $US1.39.
That has seen the Aussie dollar weaken as well.
Friday night it finished at 88.38 US cents in New York, down more than 5% from its highs in early January of just over 93 US cents.
This rebound by the greenback has been the major force driving commodity prices lower, especially the big three: oil, gold and copper which are speculators’ favourites.
Sugar and platinum have been the only commodities to resist the trend.
Corn, soybeans and wheat all fell sharply last month, recording their biggest falls since midway through last year.
Big crops have helped send prices lower, but the dollar’s jump has played a big part as well.
The Standard & Poor’s GSCI Index 24 raw materials fell by around 7% last month, the biggest since the depths of the post Lehman crisis in December 2008.
Zinc and led fell more than 17% and copper was off 8.8%, its biggest fall in over a year.
Copper is actually down more than 13% from its highs in early January.
Oil fell 8% last month, the first decline since last July.
But it too is down 13% from the highs in the cold days of early January when big freezes dominated events in Europe, China and the US.
Last week saw much of the pain taken, with base metals hit hard.
Copper dropped below $US7,000-a-tonne mark, the 8.7% fall over the week took the London price to $US6,750 a tonne, or around $US3.05 a pound in New York.
Over the week, aluminium lost 7.1% on the LME at $US2,072 a tonne, zinc dropped 10.4% to $US2,105 a tonne, lead shed 9.5% to $US2,025 a tonne and tin fell almost 5% to $US16,900 a tonne.
But nickel held up, rising 1% to $18,490 a tonne over the week.
April Comex gold futures in New York fell $US1 to $US1083.80.
It fell half a per cent for the week and 1.1% for all of January, the second monthly fall in a row.
On Thursday, gold yesterday touched $US1,074.40, the lowest level since November 3 and sharply lower than the all time high of $US1227.50 on December 3.
In other metals markets, March Comex silver fell 2.2 cents to $US16.19 an ounce and ended down almost 4% for the month.
April platinum for April delivery rose $US12.10 to $US1,506 an ounce on Nymex, up 2.4% for January.
Palladium was up 1% for the month as well.
Nymex March West Texas Intermediate lost 75 cents at $US72.89 a barrel on Friday, down 2.2% for this week.
In London ICE March Brent fell 67 US cents to $US71.46 a barrel, down 1.9%.
Sugar stood out, again.
The ICE March contract for raws in New York rose 4.6% to 30.12 US cents a pound.
Sugar rose 13% in January as the global shortfall shows no sign of disappearing.
But US corn futures dropped 13% in January, wheat 12% and soybeans slumped 12%.
