Price swings in commodities are the biggest in 26 months as a slump in raw materials drives the value of oil and gold near their costs of production.
As the Bloomberg Commodity Index slipped to a five-year low today, the gauge’s 60-day historical volatility surged to the highest since Oct. 1, 2012. Supply gluts and the threat of slowing economic growth in China have driven crude, copper and soybeans into bear markets.
Bumper U.S. harvests pushed crop prices so low that taxpayers will probably pay billions of dollars more to subsidize farmers than anticipated just months ago. Lower gold costs means that mining companies may cut output in 2015, according to Bloomberg Intelligence. In China, the world’s largest consumer of energy, metals and grains, a government manufacturing gauge fell to an eight-month low in November.