CRB Commodity Index Heads for Biggest 1-Day Drop Since March (Millie Munshi)

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Aug. 4 (Bloomberg) -- Plunging prices for cocoa, natural gas and sugar are sending the Reuters/Jefferies CRB Index of 19 commodities to it biggest one-day decline since March.

The CRB index fell 3.3 percent to 402.22 at 12:59 p.m. in New York, which would mark the largest slide since March 19. The gauge dropped to the lowest level since May 2 today, as did the UBS-Bloomberg Constant Maturity Commodity Index.

{xtypo_quote_right} Commodities are "at the beginning of a long-term bear market," after rallying the past seven years, Michael Aronstein, chief investment strategist at Oscar Gruss & Son Inc. in New York, said last week. {/xtypo_quote_right}

The CRB slid 10 percent in July, the most in any month since March 1980, when the U.S. economy was in a recession. A worsening global growth outlook and prospects for increased supply sent raw materials such as crude oil, soybeans and gasoline tumbling from records in the past month.

``Speculation had been driving these markets and they were due for a correction as so many prices had gotten overdone,'' said Peter Sorrentino, who helps manage $16.7 billion at Huntington Asset Advisors in Cincinnati. ``There are moderating growth expectations that are going to hurt industrial commodities. Going forward, you have to be very selective.''

Cocoa was today's biggest loser, dropping as much as 9.5 percent to a six-month low of $2,712 a metric ton on ICE Futures U.S., the former New York Board of Trade. Natural gas fell as much as 8.2 percent to $8.616 per million British thermal units on the New York Mercantile Exchange, and sugar was down as much as 6.2 percent to 13.26 cents a pound on ICE Futures.