Commodities sank a third day on speculation that U.S. lawmakers won’t agree on a plan to reduce the deficit and amid concern Europe’s debt crisis will send the region into recession.
The Standard & Poor’s GSCI Index of 24 raw materials fell 1.4 percent. Cotton slumped to a 14-month low, cocoa slid to the lowest in 30 months and silver also declined.
A 12-member bipartisan debt-reduction committee will probably announce today that it can’t reach agreement on deficit reductions of at least $1.2 trillion. Germany’s Finance Ministry said the country’s expansion has gotten “noticeably slower.”
“The euro-zone debt crisis and news that the U.S. Congress has failed to agree to measures to reduce the budget deficit depressed commodities,” Greg Grow, the director of agribusiness at Archer Financial Services Inc. in Chicago, said in a telephone interview.
Today is the deadline for the Congressional Budget Office to receive information for analyzing how a proposal would affect the budget deficit ahead of the supercommittee’s Nov. 23 target for reaching a deal.
Germany’s Bundesbank tempered its forecast for gross domestic product in Europe’s largest economy to expand between 0.5 percent and 1 percent in 2012 from a June prediction of 1.8 percent.
Copper futures for March delivery dropped 2.7 percent to $3.327 a pound at 2:38 p.m. on the Comex in New York. Earlier, the price touched $3.2885, the lowest for a most-active contract since Oct. 21. The metal declined 7.7 percent in the previous three weeks.
Crude oil for January delivery fell 75 cents, or 0.8 percent, to $96.92 a barrel on the New York Mercantile Exchange. The price ranged from $95.24 to $97.86. Futures are up 6.1 percent this year.
Cotton for March delivery fell 3.1 percent to 90.41 cents a pound on ICE Futures U.S. in New York. Earlier, the commodity touched 90.16 cents, the lowest for a most-active contract since September 2010.
Cocoa for March delivery retreated 1.8 percent to $2,414 a metric ton on ICE Futures U.S. in New York. Earlier, the price touched $2,403, the lowest for a most-active contract since May 2009. The chocolate ingredient is heading for its sixth straight decline, the longest slump since March.
Silver for December delivery dropped 3.1 percent to $31.405 an ounce on the Comex. The price has increased 14 percent in the past 12 months.
Gold for December delivery slipped as much as 2.6 percent to $1,680 an ounce, the lowest price since Oct. 24 on the Comex in New York.
The Standard & Poor’s 500 Index dropped 1.7 percent in New York, and the Dow Jones Industrial Average decreased 2.1 percent.
-With assistance from Mark Shenk in New York, Jeff Wilson in Chicago and Yi Tian in New York. Editors: Dan Stets, Bill Banker