Most commodities tumbled Monday as investors sold assets ranging from oil to coffee to grains to cover deepening losses in stocks and bonds. But gold ended slightly higher, as safe-haven buying kept it above the key $1,000 level.
The Reuters Jefferies CRB Index, which tracks 19 commodities futures, fell about 5 percent, its sharpest single-day slide in almost 40 years.
The selloff in energy, base metals and crops coincided with margins calls on global financial markets and a dire need for cash in almost every financial industry as the near collapse of Wall Street's Bear Stearns shook the global economy.
Crude oil futures took their hardest tumble in almost two weeks, sliding more than 6 percent. Copper, one the most economically sensitive raw materials, was down 5 percent.
Coffee and cocoa lost as much 10 percent during their worst moments in Monday's trading. Other key crops like wheat, corn and soybeans also slumped, many hitting limit-down for a session.
Most of these markets had rallied for months now due to a weak dollar. The U.S. currency fell again on Monday, plumbing new lows against other major currencies. But commodities prices fell anyway.
Shares of MF Global, the world's largest broker of exchange-listed futures and options, fell as much as 78 percent and company officials scrambled to reassure investors that it had enough funds for normal business.
"I think a move toward liquidity, aside from the longer-term fundamentals, is driving this," said Bart Melek, Global Commodity Strategist at Toronto's BMO Nesbitt Burns.
"Credit is difficult to get and if you have an asset that has made money, and commodities certainly have, you sell what you need to sell to get liquidity.
While markets like gold -- which has risen over 20 percent in three months -- and wheat -- up almost 30 percent in the same span -- still seemed dangerously overbought, many analysts said they were among the best places for investors now.
"The returns in all asset classes, if you aggregate them, pale with what investors get now in commodities," said Adam Sarhan, a Florida-based commentator on global markets.
"Where else can you put your money? You can't put it in the money market with the way interest rates are falling. You can't put it in the stock market because the stock market is going down everyday. You can't put it in emerging markets because those are going down with Wall Street as well. And you can't put it in Treasuries because they are yielding practically nothing."
Investors in five of the world's top commodity indexes saw returns of almost 30 percent on average for 2007 against the 4 percent from Wall Street's S&P Index 500 and the 6 percent from the Lehman Aggregate bond index.
Sell-Off Hits Markets from Crude Oil to Rice
U.S. crude settled at $105.68 a barrel, down 4.11 percent after touching a record high of $111.80 during Monday's session.
Copper for May delivery on the New York Mercantile Exchange's Comex division lost as much as 17 cents to hit an intraday bottom of $3.6540 a lb -- its lowest since Feb. 19. It settled at $3.6850, down 14.30 cents.
Comex gold for May rose early to a record high of $1,033.90, then pared gains but still managed to close up $3.10 at $1,002.60.
On the Chicago Board of Trade, wheat fell the 50-cent limit-down for a session; corn the 20-cent limit-downand rice the 50-cent limit-down.
Analysts said the cash-driven liquidation in commodities may continue even after Monday and it was hard to estimate how much froth needed to come off these markets.
"Wall Street hates uncertaintly. They'd rather get bad news than uncertainty, because who knows who else will be next to fall?" said Ron Lawson, managing director at logicadvisors.com. "If we go a couple of weeks and no one else pukes, maybe we'll get some more solid footing under us."