Commodities fell the most in 18 months on speculation that China will increase borrowing costs to damp inflation, eroding demand for crops, metals and energy.
The Thomson Reuters/Jefferies CRB Index of 19 raw materials fell 3.6 percent, the most since April 20, 2009. Sugar fell by a record 12 percent in London and the most in 22 years in New York. Corn and soybeans in Chicago dropped by the exchange limit.
China is the world’s leading consumer of many commodities, and consumer prices in the country last month topped a two-year high. On Nov. 9, raw materials rose to a 25-month peak as gold surged to a record, while cotton and copper headed for all-time highs. Wheat and rice also slumped today, and the grain component in the CRB had the biggest drop at 5 percent.
“The risk of rising Chinese rates increases the chances for demand to slow,” said Dale Durchholz, the senior market analyst at AgriVisor LLC in Bloomington, Illinois. “The message is, China is taking a more aggressive stance to cool inflation and push speculative money out of commodities.” (more)