Commodities Drop to Lowest Since January as Dollar Cuts Demand

New York (Sept 9)  Commodities declined to the lowest level in almost eight months as the dollar advanced on speculation that the Federal Reserve will increase interest rates next year, curbing demand for raw materials.

The Bloomberg Commodity Index (BCOM) that tracks 22 futures lost as much as 0.3% to 123.8830, the lowest intraday level since Jan. 13, before trading at 123.9882 by 3:08 p.m. in Singapore. Nickel tumbled the most in a month, while corn traded near the lowest in four years and Brent crude declined for a fourth day.

The dollar, as measured by the Bloomberg spot index that tracks the greenback against 10 peers, climbed to a 14-month high before U.S. data this week forecast to show jobless claims fell and retail sales improved. Fed policy makers will meet on Sept. 16-17. Advances in the greenback make dollar-priced commodities more expensive in terms of other currencies.

“The dollar strength is certainly playing into the weakness of commodities across the board,” Wayne Gordon, a commodity analyst at UBS AG in Singapore, said by phone today.

Nickel for delivery in three months dropped as much as 1.9 percent to $19,550 a metric ton on the London Metal Exchange, the biggest intraday loss since Aug. 8, before trading at $19,580. Brent for October fell 36 cents to $99.84 a barrel on the London-based ICE Futures Europe exchange.

Corn for December delivery lost as much as 0.5 percent to $3.465 a bushel on the Chicago Board of Trade. Futures fell to $3.4375 on Sept. 4, the lowest for a most-active contract since June 2010.

Source:  Bloomberg