Commodities head for worst monthly loss since recession of 2008

Commodities fell for a third day and are poised for the biggest monthly loss since the recession of 2008 as Europe's escalating debt crisis dimmed prospects for demand and sent crude oil into a so-called bear market. The Standard & Poor's GSCI Spot Index of 24 raw materials dropped 1.1 percent to 596.96 at 11:15 a.m. in New York, down 13 percent in May, the most since November 2008. Earlier, the gauge slipped to 595.8, the lowest since Oct. 6. Crude oil is set for the biggest monthly decline since December 2008 in New York, while copper slumped 12 percent. Costs to protect Spanish government bonds with default swaps rose to a record yesterday, while a Greek poll showed support for anti-austerity parties before elections next month that may presage the country's exit from the euro. Slower growth in China also hurt metals and energy prices in May. “Certainly we are seeing a risk-off mentality,” said Natalie Robertson, a commodities analyst at Australia & New Zealand Banking Group Ltd. in Sydney. “More pressure may be coming from Europe and the other negative factor is the dollar/euro, which is going to weigh on commodity prices.” The euro dropped to $1.235, its weakest since July 2010. Citigroup Inc. has forecast that the currency may decline to $1.20 in the months ahead and reach parity with the dollar in a year. The existing structure of the euro isn't sustainable, according to Tom Fitzpatrick, chief technical analyst at Citigroup Global. Crude-oil futures for July delivery fell 1.3 percent to $86.66 a barrel on the New York Mercantile Exchange, set for a loss of 17 percent this month. Futures today are 20 percent lower than their highest settlement this year, a definition of a bear market. Copper futures for July delivery slipped 1 percent to $3.355 a pound on the Comex in New York. Soybean futures for July delivery dropped 2.1 percent to $13.445 a bushel on the Chicago Board of Trade, down 11 percent for the month. --Bloomberg News--