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Commodity Investing – Commodities extended their decline, falling to the lowest level in almost eight months, after U.S. employers created fewer jobs than economists estimated and Chinese manufacturing slowed.
The Standard & Poor’s GSCI Spot Index fell 2.6 percent to 580.99 in New York, the lowest settlement since Oct. 4. The index declined 6.4 percent this week, a fifth straight drop and the biggest since September. Wheat, heating oil, cotton and gasoline led the losses.
U.S. payrolls climbed by 69,000 last month, below the most pessimistic forecast in a Bloomberg News survey, Labor Department figures showed today in Washington. China’s Purchasing Managers’ Index fell to 50.4 in May from 53.3 in April, China’s statistics bureau and logistics federation said today in Beijing. Euro area and U.K. manufacturing contracted.
“The U.S. payroll numbers were significantly weaker than expected and the PMI out of China and the U.K. were terrible as well,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “We’re getting very weak data going into June and the markets don’t like it. Economies are slowing and demand will fall.”
Commodities also dropped after a report showed unemployment in the euro area reached 11 percent in April and March, the highest since the data series started in 1995. The European debt crisis that began in Greece has spread to Ireland, Portugal, Italy and Spain, curbing economic growth and demand for fuel.
Crude Oil Futures
Crude oil futures for July delivery fell $3.30, or 3.8 percent, to $83.23 a barrel on the New York Mercantile Exchange, the lowest settlement since Oct. 7. Prices fell 17 percent in May, the biggest slide since December 2008.
Brent oil futures for July settlement slipped $3.44, or 3.4 percent, to $98.43 a barrel on the ICE Futures Europe exchange in London. It was the lowest close since Jan. 27, 2011. Brent is down 8.3 percent this year.
Natural gas futures for July delivery dropped 9.6 cents, or 4 percent, to settle at $2.326 per million British thermal units on the Nymex. Futures, which dropped to a 10-year intraday low of $1.902 on April 19, are down 22 percent this year.
Copper fell in New York, capping the longest streak of weekly declines in two years. Copper futures for July delivery retreated 1.5 percent to $3.3135 a pound on the Comex, the lowest settlement price this year.
On the London Metal Exchange, copper for delivery in three months dropped 0.9 percent to $7,361 a metric ton ($3.34 a pound). Aluminum, tin, lead and nickel also declined in London. Zinc rose.
Wheat futures slid, capping the biggest weekly loss in more than 14 months, on speculation that global supplies will be ample as the harvest in the U.S. progresses and rains ease dry conditions from Russia to Kansas. Wheat for July delivery dropped 4.9 percent to end the session at $6.1225 a bushel on the Chicago Board of Trade. Futures fell 10 percent this week.
Cotton futures fell on concern that a sluggish global economy will erode demand. Cotton for December delivery slid 3.9 percent to close at 67.61 cents on ICE Futures U.S. in New York. Orange-juice futures for July delivery slipped 0.3 percent to $1.117 a pound in New York.
Gold and silver led the commodities moving higher. Gold rose the most since Sept. 27 on speculation that the Federal Reserve will take steps to stimulate growth. Gold futures for August delivery jumped 3.7 percent to settle at $1,622.10 an ounce on the Comex in New York. It was the biggest gain for a most-active contract since Aug. 8.
Silver futures for July delivery rose 2.7 percent to $28.512 an ounce on the Comex. Futures fell 11 percent last month.
Soybean futures for July delivery rose 0.3 percent to settle at $13.4425 a bushel on the Chicago Board of Trade. Corn futures for July delivery slipped 0.7 percent to $5.515 a bushel.
The GSCI Spot Index dropped 13 percent last month, the worst monthly loss since November 2008.
- Mark Shenk in New York at Bloomberg.