Agricultural commodities, and in particular so-called softs like sugar and coffee, fell hard Wednesday as investors, eyeing the euro zone crisis, priced in the potential fallout on consumption of U.S. farm exports.
A strengthening dollar, which reached levels not seen since October of 2010, further drove down prices across the wider commodity market, taking down energy futures, livestock and industrial metals. Even precious metals suffered in the wide risk-off rally.
The instability within the euro zone resulted in a selloff across risk assets, pushing the U.S. dollar higher and commodity prices lower, Luke Mathews, an analyst at Commonwealth Bank of Australia, told Bloomberg.
New York-traded foodstuffs saw some of the biggest losses, with sugar falling over 5 percent to multi-month lows near 19 cents per pound before retracing somewhat to recently trade at 19.53 cents per pound. Coffee fell to levels not seen since 2010, dropping over 7 cents to recently trade at $1.6755 per pound.
Everyone is watching currencies with sugar producers' currencies weakening against the dollar, Peter de Klerk, a senior analyst with London-based commodities house, Czarnikow, explained to Reuters.
In Chicago, traders sold off wheat and soybeans, while corn futures were heavily traded down in early-morning action before seeing a huge spike around 9:30 a.m. Livestock got slaughtered, with live cattle and lean hogs indexes falling to levels just a few basis points away from yearly lows.
Most of those commodities have fallen for the past four sessions.
Metals were weak, with gold falling 2.35 percent from the previous day's settle to recently sell for $1,539.5 per ounce. Silver, palladium and copper all tracked losses close to 2.5 percent.
Oil fell on the same factors affecting other commodities but, investors said, was also affected by a spate of additional developments, including rising U.S. stockpiles and some progress in the political détente between Iran and the United Nations.
There's a little bit of optimism that the Iran talks will succeed. Phil Flynn, an analyst at futures brokerage, PFGBest, told BusinessWeek.
Contracts for light sweet crude recently traded at $90.64 per barrel, off 1.32 percent, after having falling as low as $90.18 per barrel earlier in the day.
Natural gas appeared to be one of the few commodities bucking the global sell-off, as the much-battered energy product is already near decade lows and does not seem to have much room to fall further down. Natural gas futures for spot delivery at the Henry Hub terminal recently traded at $2.707 per British thermal unit, unchanged from the previous day's settle.