Cheaper oil compounding protracted commodities slump

New York

LOWER fuel prices are compounding the longest commodity slump in a generation.

Because energy accounts for as much as half the cost to produce food and metals, all sorts of commodities will keep dropping, according to Societe Generale SA (SocGen) and Citigroup Inc. With inventories ample and slowing economies eroding demand, cheaper oil lowers the price floor for mining companies and farmers to remain profitable. Corn may drop another 3 per cent, cotton 6.5 per cent and gold as much as 5 per cent, SocGen estimates.