COMMODITIES-Profit taking hits grains, gold; index up 3 pct in Jan

Thu Jan 31, 2013 6:00pm EST

* Benchmark index rises most in six months in January
    * Market readies for key jobs data due Friday
    * Grains knocked lower by profit taking
    * Energy markets dominated by spread trading

    NEW YORK, Jan 31 (Reuters) - Commodities handed back some of
the previous day's gains on Thursday, but stronger crude oil,
corn and cotton prices in January pushed the complex to its best
monthly performance in six months in January.
    Soybeans and wheat were pushed lower on Thursday by profit
taking, while gold slipped 1 percent on technical selling after
hitting two-week highs a day earlier. That offset a buoyant
crude market.
    A resurgent U.S. dollar pushed commodities off Wednesday's
highs, while a mixed bag of U.S. data gave more reasons for
investors to be cautious ahead of key jobs report due on Friday.
    Thursday's data showed improving American income growth in
December and better wage growth, which helped to allay some
concerns over the health of the world's largest economy after
its unexpected contraction in the fourth quarter. On Wednesday,
the Federal Reserve pledged to maintain its monthly $85 billion
bond-buying program.
    Investors are now waiting for nonfarm payrolls data on
Friday for a close look at the U.S. labor market. Economists
polled by Reuters forecast a rise to 160,000 new non-farm jobs
in January, up from 155,000 in December, with the unemployment
rate remained steady at 7.8 percent. 
    The Thomson Reuters-Jefferies CRB index, which
serves as a global indicator for commodities, settled down 0.25
percent on Thursday, but rose 3 percent on the month, its
biggest monthly gain since August last year.
    Fourteen of the CRB's 19 components rose in the first four
weeks of the year, with cotton, corn, light crude and nickel the
top gainers. 
    Cotton was the stand-out performer, soaring more than
10 percent for its best four-week performance since February
2011, as speculative investors piled into the fiber betting on
lower acreage and robust demand from China. 
    After two years of double-digit percentage falls, the market
was seen by the fund community as oversold even though
fundamentals have not improved.
    Corn rose over 6 percent during the month on fresh concerns
about crop supplies, while crude jumped over 6 percent and
nickel gained 7 percent.
    In contrast, sugar lost 3.5 percent in January as
investors braced for another bumper crop out of top producer
Brazil.
    Broader financial markets started the year on a strong note
too. S&P 500 posted its best monthly gain since October 2011 as
investors cheered a compromise that temporarily postponed the
impact of the "fiscal cliff" and fourth-quarter earnings were
better than expected. 
    The euro posted its best month in over a year.
    
    WEAKER GRAINS
    U.S. soybean futures turned lower on Thursday on
profit-taking, after hitting a six-week high on Wednesday, as
forecasts for better crop weather in South America eased
concerns about harvest delays and production losses there.
    Chicago Board of Trade March soybeans fell 10-1/4
cents, or 0.7 percent, to $14.68-1/2 per bushel. The contract,
which struck a six-week high on Wednesday, rose this month for
the first time in five months, adding 3.1 percent.
    Wheat fell along with soybeans. Wheat for March delivery
 declined 7-1/2 cents, or 1 percent, to $7.79-1/2 per
bushel. The spot wheat contract gained 1-1/2 cents in January,
the first monthly gain in four months.
    "The market's rallied pretty significantly in the last few
sessions, so on the final day of the month it's no surprise to
see a little profit-taking," said Karl Setzer a commodity
trading adviser and market analyst at MaxYield Cooperative.
    All eyes have been on South American weather this week as
overly wet conditions stalled early soy harvest in Brazil and
persistently dry weather threatened corn and soybean crops in
neighboring Argentina.
    Crops from both major exporters are crucial for replenishing
tight global supplies. 
    
    GOLD SLIPS   
    Gold fell nearly 1 percent on technical selling after the
previous session's rally. 
    The metal hit a two-week high above $1,680 an ounce on
Wednesday after data showed the U.S. economy unexpectedly shrank
in the fourth quarter. 
    Bullion's repeated failure to rise above major resistance at
$1,700 in January triggered technical selling, traders said.
    "I would buy puts on any rallies. The market looks bearish
as option volatilities are falling," said COMEX gold options
floor trader Jonathan Jossen.
    Spot gold was down 0.8 percent at $1,663.5 an ounce
by 4:45 p.m. EST (2145 GMT). 
    U.S. COMEX gold futures for February delivery settled
down $19.30 an ounce at $1,660.60, with trading volume about 10
percent below its 250-day average, preliminary Reuters data
showed. 
    
    ENERGY AND SPREAD TRADES
    On energy markets, brent crude oil futures rose to a
three-month high on Thursday, widening its premium over U.S.
crude, as concerns about stockpiles in the U.S. Midwest prompted
heavy trading based on the spread between the two benchmarks.
    Brent's premium to U.S. crude jumped to $18 a barrel for the
first time since early January. Traders cited concerns about
stockpiles at the Cushing, Oklahoma delivery point for the U.S.
contract, which have pushed to record highs.
    London-traded Brent rose 65 cents to settle at
$115.55 a barrel, the highest settlement since mid-October,
reaching a session peak of $115.76. For the month, Brent crude
futures gained $4.44, or 4 percent.   
    The spread between Brent and U.S. crude settled at $18.06 as
U.S. crude lost 45 cents to settle at $97.49 a barrel, a
day after it hit the highest price in more than four months. For
the month, U.S. crude gained $5.67, or 6.17 percent. 
    Traders focused on the timeline for the resumption of
previous throughput levels on the Cushing-to-Texas Seaway
pipeline, which started up in early January. The line will move
U.S. and Canadian crude to the Gulf Coast, where it fetches a
premium.
    Front-month February U.S. gasoline futures snapped 10
straight days of gains that had tacked 12 percent on to the
price as the contract headed into expiry at settlement.   
    
 Prices at 5:09 p.m. EST (2209 GMT)      
                             LAST/      NET    PCT     YTD
                             CLOSE      CHG    CHG     CHG
 US crude                    97.41    -0.53  -0.5%    6.1%
 Brent crude                115.61     0.71   0.6%    4.1%
 Natural gas                 3.339    0.004   0.1%   -0.4%
 
 US gold                   1660.60   -19.30  -1.1%   -0.9%
 Gold                      1663.40     0.41   0.0%   -0.7%
 US Copper                  373.20    -1.80  -0.5%    2.2%
 LME Copper                8165.00   -61.00  -0.7%    3.0%
 Dollar                     79.237   -0.044  -0.1%    3.2%
                            #DIV/0!
 
 US corn                    740.50     0.25   0.0%    6.1%
 US soybeans               1468.50   -10.25  -0.7%    3.5%
 US wheat                   779.50    -7.50  -1.0%    0.2%
 
 US Coffee                  146.95    -0.75  -0.5%    2.2%
 US Cocoa                  2205.00    26.00   1.2%   -1.4%
 US Sugar                    18.78     0.07   0.4%   -3.7%
 
 US silver                  31.351   -0.826  -2.6%    3.7%
 US platinum               1677.40     0.00   0.0%    9.0%
 US palladium               745.70    -5.70  -0.8%    6.0%
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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