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Commodities plunge amid global sell-off

March 15, 2011 | 10:59 am

Commodity prices are getting hammered Tuesday as investors dump risky assets across the board, fearing worse to come in Japan and in the Middle East.

The ThomsonReuters/Jefferies CRB index of 19 major commodities was down 2.9% to 340.47 at about 11 a.m. PDT, on track for its biggest one-day drop since Nov. 16.

By contrast, U.S. stocks were holding up reasonably well, considering the market collapse in Japan overnight, when the Nikkei-225 stock index plunged 10.6% amid the growing crisis at the Fukushima nuclear power complex.

The Dow Jones industrial average was off 183 points, or 1.5%, to 11,810 at about 11 a.m. PDT. It had been down 297 points at the outset of trading.

In commodity markets, corn slumped 30 cents, or 4.5%, to $6.36 a bushel, a two-month low. Wheat sank 47 cents, or 6.5%, to $6.73 a bushel, the lowest since mid-November.

Of the 19 commodities in the CRB index, just natural gas and aluminum were trading higher for the day.

"It’s just ‘get out of the risk’ -- because you don’t know what’s going to happen,” said Frank Lesh, a trader at FuturePath Trading in Chicago. “You don’t stand in the way of this.”

Even gold -- usually a haven in times of turmoil -- was tumbling as some investors took profits from the  metal's recent surge. Near-term gold futures in New York were off $31.30, or 2.2%, to $1,394 an ounce.

Cash is king at a time like this, and many investors and traders clearly were raising more of it.

Crude oil prices also were down, despite Bahrain’s declaration of a state of emergency as the government seeks to halt a popular uprising.

Traders said worries about Middle East oil supplies were being offset, for now, by expectations of lower demand from Japan as its economy reels from last Friday’s earthquake and tsunami.

Crude futures in New York were off $2.55 to $98.64 a barrel and the London crude price was down $3.17 to $110.50.

But the International Energy Agency said Japanese oil consumption may eventually rise by about  200,000 barrels a day if the country makes up for lost nuclear-power generation with oil-fired power.

-- Tom Petruno