Fear of a worsening debt crisis in Europe jolted commodities markets Wednesday. Prices for oil, copper, palladium, cotton and coffee hit the lowest levels in at least a year and, in some cases, even longer.
Investors are afraid that demand for commodities will decline if European leaders are unable to resolve the region's debt crisis and get their economy going again. There's also concern about the impact of slower economic growth in China, which is a huge importer of commodities. Many sold off commodities to buy more stable assets such as the dollar and Treasurys.
Leaders of the 27 countries that make up the European Union met Wednesday in Brussels to discuss ways their economic problems and the political and financial uncertainty in Greece.
A June 17 election in Greece could put politicians in power who oppose the terms of the country's bailout funding agreement with the European Union. That could result in Greece leaving the group of 17 countries that use the euro for currency.
Separately, the World Bank predicted Wednesday that economic growth in the East Asian region would slow to 7.6 percent this year from 8.2 percent last year. The group includes China, South Korea and Southeast Asia but excludes Japan. The World Bank left its growth forecast for China unchanged at 8.2 percent.
"Given this gloomy backdrop, we expect that markets will continue to be on the defensive for much of this week, at least until we see more specifics coming out from the EU policy meeting," INTL FCStone metals analyst Edward Meir said in an emailed statement.
Gold for June delivery dropped $28.20 to finish at $1,548.40 an ounce and July silver fell 66 cents to $27.519 an ounce.
July copper decreased 9.1 cents, or 2.6 percent, to $3.396 per pound, its lowest level since Dec. 29. July platinum dropped $44.30, or 3 percent, to $1,414.10 an ounce and June palladium fell $24.45, or 4 percent, to $591.10, its lowest price since November.
Oil prices fell after the government said U.S. supplies hit the highest level since 1990 last week.
Benchmark crude dropped $1.95 to end at $89.90 per barrel, the lowest since Oct. 21. Heating oil decreased 4.93 cents to end at $2.8121 per gallon and gasoline futures fell 6.47 cents to $2.8723. Natural gas rose 3 cents to $2.737 per 1,000 cubic feet.
In other trading, coffee for July delivery fell 7 cents, or 4.4 percent, to $1.669 per pound, its lowest price since August 2010. July cotton ended down 3 cents, or 4 percent, at 71.51 cents per pound. It was the lowest price for cotton since February 2010.
In July contracts, wheat fell 20 cents to end at $6.655 per bushel, corn rose 6.5 cents to $6.035 per bushel and soybeans dropped 19.75 cents to $13.625 per bushel.