By Madhurima R S
The global credit crisis has had its share of impact on the commodities sector both in India and globally which was not the case in the first half of 2008 when the sector seemed to be insulated from the crisis.

There were major corrections in commodities prices, including precious and base metals and crude oil on Monday. Price of crude oil for October fell nearly 3 per cent on Multi Commodity Exchange. October contracts of base metals lost an average 2 per cent while precious metals December contracts lost just about 1 per cent.

Long-only money has shrunk by as much as $50 bn with the sharpest drops in agricultural futures and oil markets. Citigroup reported that the net long position since July collapsed to $8 bn from.

According to data released by Commodity Futures Trading Commission (CFTC) large outflows have occurred in agricultural index investments amounting to $1.44 bn last week reversing the inflows of 2007-08.

"Large outflows from agricultural index investments continue, this past week amounting to $1.44 billion," UBS said, basing its estimate on data released by the Commodity Futures Trading Commission. "Over the past quarter, index investors have sold $9.1 billion worth of agricultural index positions, reversing the inflows of 2007 and 2008.

According to CFTC data, since August 2006, open interest in US crude oil has slipped to the lowest level for the week to September 23.

CFTC data for the week to Sept. 23the fortnight since the credit crisis escalated—shows open interest in U.S. crude oil dropping to its lowest level since August 2006. Among soft commodities, one of the sharpest drops in long positions has been in New York-traded raw sugar.

However not all commodities saw exodus of long money. Gold saw a jump of 38,361 net long contracts held by speculators which included index exposure.

Meanwhile, the reduction in steel production in China has hit Indian iron ore exporters hard.with many Chinese buyers defaulting on contracts with suppliers.