Highflying no more: Commodity prices take another big hit

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From Times staff writer Walter Hamilton:

The bulls are on the run in the commodities markets. Only this time, it’s for the exits.

Raw materials prices plunged today amid another wave of fear that a slowing global economy could reduce demand for everything from oil to copper to cocoa.

The Reuters/Jefferies CRB index of 19 major commodities skidded 3.4% -- its worst one-day showing since it slumped 4.1% on March 19, and a continuation of the sell-off that began early last month.

In the CRB index, only hog futures advanced today. For the rest of the commodities market, ‘It’s pretty much a big red day across the board,’ said Hector Galvan, senior market strategist at RJO Futures in Chicago.

Crude oil led the way down after it appeared that Tropical Storm Edouard had lightened and wouldn’t cause significant damage to oil and natural gas operations in the Gulf of Mexico. Oil briefly dipped below $120 early in the session and finished down $3.69, or 3%, to $121.40 a barrel.

Natural gas futures tumbled 8.3%. Soybeans, corn and sugar each fell more than 5%. Cocoa was off more than 7%.

The weakness in oil sparked a round of selling in other raw materials as some market players opted to take profits before their gains evaporated further, Galvan said.

The renewed pullback in commodities didn’t seem to be of much help to the stock market, as major indexes closed lower. But Wall Street’s decline was powered in large part by steep losses in commodity-related stocks, including energy and mining issues. The Dow Jones industrial average ended down a modest 42.17 points, or 0.4%, to 11,284.15, as gains in Wal-Mart Stores, McDonald’s and Procter & Gamble helped offset sharp declines in Exxon Mobil and Chevron.

With the CRB index now off 15% from its record high reached July 2, some commodity investors and speculators may be facing a crucial decision point: Is this just a temporary setback in commodities’ six-year-old bull market -- or the closing curtain?