Commodities Close to Erasing 2012’s Gains on Europe, U.S. Data

Commodities fell for a fourth straight session, nearly erasing this year’s gains, after elections in France and Greece showed voters rejecting austerity and fueled concern that raw-material demand will slow.

The Standard & Poor’s GSCI Spot Index had its worst run since August, losing as much as 1.3 percent to 645.29, the lowest level since Dec. 30. The gauge, which tracks 24 raw materials, settled down 0.2 percent at 4:04 p.m. in New York, paring gains this year to 1.1 percent. Crude oil fell as much as 3.2 percent to $95.34 a barrel, the lowest since Dec. 20.

Commodities retreated in March, April and this month on concern that the European debt crisis may endanger the global recovery. Slowing expansion in China and worse-than-expected job growth in the U.S. also spurred declines. In March, Goldman Sachs Group Inc. cut its three-month commodities outlook to neutral, warning that economic growth was likely to soften.

“The market is not happy with the sudden increase in uncertainty,” said Jeremy Friesen, a commodity strategist at Societe Generale SA, referring to the election outcomes in Europe. “We expect China to continue to weaken near term, the U.S. is still going through this funk, Europe is in recession, and now you overlay some policy uncertainty.”

Crude-oil futures for June delivery fell 0.6 percent to settle at $97.94 on the New York Mercantile Exchange. Energy, including crude oil, gasoline and natural gas, accounts for 70.5 percent of the S&P GSCI, according to weightings on Standard & Poor’s Ratings Services’s website for Dec. 30. Most markets in London are closed today for a holiday.

Agriculture Slump

Corn dropped for the first time in three sessions on speculation that weekend rain and forecasts for warm weather this week will boost U.S. yield potential. Corn futures for July delivery fell less than 1 percent to $6.20 a bushel on the Chicago Board of Trade, while soybean futures dropped 0.8 percent to settle at $14.6575 a bushel.

Cotton futures for July delivery fell 1.5 percent to 86.67 cents a pound in New York, the fourth straight decline, marking the longest slide since April 5.

Payrolls in the U.S., the world’s largest economy, climbed by 115,000 in April, the smallest gain in six months and less than the median economist forecast of 160,000, Labor Department data showed on May 4.

In France, Socialist Francois Hollande was elected president, defeating incumbent Nicolas Sarkozy. Hollande’s platform calls for policies German Chancellor Angela Merkel opposes, including a delayed deficit-reduction effort.

In Greece, voters flocked to anti-bailout parties in parliamentary elections, calling into question the country’s ability to impose the measures needed to guarantee its future in the euro. The euro fell to the lowest level in more than three months, losing as much as 1 percent to $1.2955.

‘Major Concerns’

“There are major concerns about the euro,” said Marito Ueda, a senior managing director in Tokyo at FX Prime Corp. (8711), a currency margin company. “People aren’t feeling good about austerity measures, which are the crux to a resolution of Europe’s debt problems.”

China’s economy grew 8.1 percent in the first quarter, the slowest pace in almost three years, as officials extended a clampdown on the housing market. Premier Wen Jiabao in March set an annual target of 7.5 percent, the least since 2004.

The S&P GSCI has declined 9.1 percent since reaching a 10- month high on March 1. While Brent crude, copper, gold and soybeans remain higher this year, wheat, corn and raw sugar have declined.

Goldman Sachs reaffirmed its neutral near-term stance on commodities last month, citing European debt concerns and slowing U.S. growth. Over 12 months, the bank forecast a 13 percent return and kept an “overweight” recommendation.

To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net; Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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