Commodities sink on China, European concerns


AP

NEW YORK — Commodity prices sank Tuesday amid concerns about inflation in China and a possible European bailout of Ireland’s banks. Some of the steepest declines came in agriculture products and industrial metals as traders worried that demand may diminish because of the ongoing issues in other parts of the world. In addition, the dollar grew stronger against other currencies. Since commodities are priced in dollars, a stronger dollar makes them less attractive to buyers who use currencies other than the dollar. Traders opted to sell holdings at a profit and reduce their overall risk, Lind-Waldock senior market strategist Rich Ilczyszyn said. China’s economy has been robust for much of the year but the pace of inflation hit a 25-month high of 4.4 percent in October. China’s government is releasing stockpiled pork and sugar to boost supplies in markets in an effort to slow down increases in food prices. In the United States, wholesale prices rose in October for the fourth straight month but the increase was blamed primarily on higher gasoline costs. Excluding volatile food and energy categories, the “core” index fell by 0.6 percent, largely because of lower prices for new automobiles and trucks. The report measures price pressures before they reach the consumer. It showed that companies have relatively little ability to pass on the higher costs they’re paying for grains and other commodities. For example, wheat prices have risen 16.9 percent this year; corn, up 28 percent; and soybeans, up 16.5 percent. Coffee prices have skyrocketed 45.5 percent while cotton is up nearly 77 percent. Major packaged food makers, including Kraft Foods Inc., General Mills Inc., Sara Lee Corp. and Kellogg Co., have said they have raised prices to cope with higher costs of some raw ingredients.