Wednesday, January 5, 2011

Crude, Copper Plunge After Big Holiday Rally

Commodities crumbled Tuesday, falling by their most in eight weeks as energy, metals and agricultural investors unwound much of the heady gains made on thin holiday volume over the past two weeks.

The Reuters-Jefferies CRB index dropped 2 percent in its sharpest one-day fall since mid-November after investors and traders worldwide returned to work from holidays to find many markets had run up to their highest in two years or more.

Crude oil fell more than 2 percent on Tuesday while soybeans dipped almost 1 percent, both having hit their highest since mid-2008 in recent days. Soft commodities fell harder, with cocoa down more than 3 percent.

Copper fell 2 percent in New York, its sharpest drop since Dec. 15, after having hit a succession of record highs as traders figured the constrained supply and a lack of substitutes made it one of the top picks for 2011.

Activity across all markets picked up dramatically as traders returned from holiday, with volume at mid-session already in excess of any day over the past two weeks. (more)

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