Wheat, corn and gasoline prices fell sharply Wednesday as government reports prompted fresh questions about whether global demand will erode with rising food and energy costs.
Wheat settled down 5 percent, corn fell 4.2 percent and gasoline futures declined 7.6 percent. Prices also sank for metals used in manufacturing and gold.
Two government reports indicated that demand appears to be diminishing for wheat and corn on a global basis and for gasoline sold in the United States.
The U.S. Agriculture Department predicted wheat consumption will fall through June 2012 largely due to a 17.6 percent decline in exports.
The report also noted that Russia and other countries in the Black Sea region are expected to provide more competition for U.S. wheat, a year after a drought caused heavy damage to their crops.
In addition, the U.S. winter wheat harvest is expected to be smaller because of dry conditions.
U.S. corn exports were forecast to decline by about 50 million bushels, or 2.6 percent, this summer to put stockpiles at 730 million bushels by late August. Exports were expected to drop 5.3 percent by August 2012 when the government predicted the supply will grow to 900 million bushels.
Corn supplies have been tight globally, which have caused prices to more than double since last summer. Wheat supplies are more ample so price increases haven't been as steep.
In contracts for July delivery, wheat fell 39.75 cents to settle at $7.59 a bushel, corn fell 30 cents to $6.7725 a bushel and soybeans fell 6.25 cents to settle at $13.3175 a bushel.
The price declines come as investors focus more on diminishing demand and rationing than on supply issues, said Mike Zuzolo, president of Global Commodity Analytics & Consulting LLC.
In addition, the dollar grew stronger against other currencies. Commodities are priced in dollars so a stronger dollar makes them more expensive for buyers using other currencies.
In other trading, gasoline futures and oil plunged after the Energy Department said supplies of both products grew last week.
Crude supplies rose 3.8 million barrels to 370.3 million barrels, the department's Energy Information Administration said. Analysts expected an increase of 1.6 million barrels, according to Platts, the energy information arm of McGraw-Hill Cos.
Gasoline supplies rose 1.3 million barrels to 205.8 million barrels. Analysts expected gasoline supplies to decline by 300,000 barrels.
U.S. gasoline demand dropped 2.4 percent last week, the largest drop in seven consecutive weeks of declining demand decline. Analysts believe consumers are buying less gasoline as pump prices hover near $4 per gallon as a national average.
Benchmark crude for June delivery fell $5.67, or 5.5 percent, to settle at $98.21 per barrel on the New York Mercantile Exchange.
Gasoline futures fell 25.69 cents, or 7.6 percent, to settle at $3.1228 a gallon.
The big drop halted trading on the Nymex at midday for about five minutes. The CME Group, which owns the Nymex, suspends trading automatically if the gasoline contract drops by more than 25 cents.
In other Nymex contracts for June, heating oil fell 10.29 cents to settle at $2.8983 per gallon and natural gas fell 6.2 cents to $4.241 per 1,000 cubic feet.
Meanwhile, metals used in manufacturing dropped after China reported its inflation rate eased slightly in April, an indication that measures to slow its economy are beginning to work.
China's main index of manufacturing production also fell, which created concerns about demand for metals such as copper, silver, platinum and palladium. China is a huge importer of commodities, from copper to oil.
In July contracts, silver fell $2.971, or 7.7 percent, to settle at $35.515 an ounce, copper fell 12.85 cents to $3.9135 a pound and platinum fell $23.10 to $1,777.80 an ounce. June palladium fell $17.25 to settle at $715.40 an ounce.
Gold for June delivery fell $15.50 to settle at $1,501.40 an ounce.