Dec. 5 (Bloomberg) -- Plunging prices for crude oil, copper and corn sent the Reuters/Jefferies CRB Index of 19 raw materials to its lowest level in more than six years on concern a deepening global recession will slash demand.

The CRB index fell 4.3 percent today to 208.60, touching the lowest since Aug. 6, 2002. Traders sold commodities after U.S. companies cut payrolls last month at the fastest pace in 34 years. Crude oil fell to the lowest in four years, copper dropped to its lowest since May 2005 and corn was the cheapest since October 2006.

The benchmark commodity index, down by a record 14 percent this week, is headed for the biggest annual drop since its debut in 1956. The gauge has plunged 56 percent from a record in July amid slumping manufacturing and escalating bank losses. The U.S. economy headed for the deepest and longest recession since World War II.

“Everybody is just trying to get out of the markets,” said Michael Aronstein, president of New York-based Marketfield Asset Management, who correctly predicted in June that raw materials would fall. “People are exiting as fast as they can.”

Investors should avoid industrial commodities through 2010 because the global recession will sap demand for copper and energy, Christoph Eibl, who helps manage more than $1 billion at Tiberius Asset Management, said yesterday in an interview in New York.

“You don’t want to be invested in anything that has a high correlation with the economy,” Eibl said.

‘Bulls Extinct’

Crude oil for January delivery declined $2.86, or 6.5 percent, to $40.81 a barrel on the New York Mercantile Exchange. Earlier, the price touched $40.50, the lowest for a most-active contract since December 2004.

Oil capped the biggest weekly drop since the Persian Gulf War in 1991, partly because of the jobs data. U.S. payrolls plunged 533,000 last month, the Labor Department said today.

“After the jobless number, any bulls that were left in the market will become extinct,” said Nauman Barakat, a senior vice president of global energy futures at Macquarie Futures USA Inc. in New York.

Slumping investor interest for raw materials will cap prices, even as the global economy recovers, Aronstein of Marketfield said. He said his fund posted a profit through the third quarter, partly on commodity short sales, or bets that prices of energy, metals and crops would decline.

‘Saved Our Backside’

“Our commodity shorts saved our collective backside,” said Aronstein, who has tracked the markets for more than 30 years. His fund of about $105 million is now down about 14 percent this year because of losses in equities, he said.

Copper futures for March delivery lost 9.6 cents, or 6.5 percent, to $1.3735 a pound on the Comex division of the Nymex. The metal earlier touched $1.356, the lowest since May 20, 2005.

Corn futures for March delivery fell 24.75 cents, or 7.4 percent, to $3.0925 a bushel on the Chicago Board of Trade. Earlier, the price touched $3.055, the lowest since October 2006. The price has dropped 61 percent from a record $7.9925 on June 27.

Still, investor Jim Rogers said commodity fundamentals are “unimpaired,” and prices will rebound as a lack of new supplies leads to shortages.

“Commodities will be the place to be” should the economy rebound, Rogers, the chairman of Rogers Holdings, said yesterday in an interview.

To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net

Last Updated: December 5, 2008 18:01 EST