Commodities head lower as supplies in raw materials begin to climb in the wake of potential taper by the Federal Reserve. The lack of demand in the commodities space was led by declines in West Texas Intermediate crude and gold. The Standard & Poor’s GSCI Spot Index, tracks 24 raw materials, lost 1.7 percent on the day to settle at $612.24. The commodities index touched a four month low.
Crude closed below $95 per barrel for the first time since June, and gold hit a two-week low. Hog futures and cotton slumped to multi-months lows, as well.
There is a lack of demand among institutional players. “There are ample supplies for energy products, and U.S. production continues at near-record levels. The expectations for Fed tapering have also knocked down prices,” said Bill O’Neill of Logic Adivsors.
Many commodities, particularly the softs, have seen better days with gold fighting the resistance. Coffee and sugar are also in a haze. The more optimistic FOMC report issued by the Federal Reserve accelerated losses as traders lose the appetite for risk.
Corn hit a three-year low in Chicago as rain aided planting in Argentina, and global supplies are gaining amidst record production in the United States – the world’s leading producer. Rain also led dubious trade in Coffee futures leading to new lows. Increased rain in Brazil and Columbia allowed coffee plants to flower multiple times thus increasing yield. Coffee supplies are looking to exceed global demand for a fourth straight year.
Silver and copper closed moderately lower on the day, down .05 percent and .06 percent respectively.