COMMODITIES-Broad declines on dollar's rise, softs stockpiles

Wed Feb 6, 2013 4:43pm EST

* CRB index down 0.4 pct, reversing Tuesday gain
    * US crude ends a touch lower as inventories rise
    * Sugar, arabica coffee down on surplus supply

    By Barani Krishnan
    NEW YORK, Feb 6 (Reuters) - Commodities fell broadly on
Wednesday, retreating from gains posted in the previous session,
as a rebounding dollar and increased supplies of some raw
materials weighed on prices.
    Oil closed a touch lower in New York as the euro fell
against the dollar on worries that recent strength in the single
European currency could hurt recovery in troubled economies such
as Spain. Data showing higher U.S. crude stockpiles for last
week also proved bearish.
    Brent crude in London settled slightly higher in choppy
trading.
    Abundant supplies of sugar and premium-grade arabica coffee
weighed on those soft commodities. Raw sugar moved closer to the
2-1/2 year low it plumbed last month on prospects for a third
successive global sugar surplus in the 2012/13 season.
    "Last week's short-covering rally appears to have run out of
steam," Luke Mathews, a commodities strategist who follows the
sugar market for the Commonwealth Bank of Australia, said in a
commentary.
    The Thomson Reuters-Jefferies CRB index settled
down 0.4 percent as the global commodities indicator completely
reversed Tuesday's gain.
    Thirteen of the CRB's 19 components settled in negative
territory. Nickel, sugar and lean hogs lost
about 2 percent each and orange juice, cocoa, corn
 and aluminum about 1 percent.
    Attention in commodities appears to have returned to core
supply-demand issues as the U.S. fiscal worries that dominated
trading at the end of last year abated, analysts said.
    The U.S. Congressional Budget Office said on Tuesday it saw
the federal deficit coming in at around $845 billion this year,
well below the $1.1 trillion shortfall of 2011.
    Referring to the U.S. deficit, INTL FC Stone metals analyst
Edward Meir said in Wednesday's market note: "It seems that
investors are no longer anticipating any type of grand bargain,
which means they are not going to push the markets sharply
higher or lower. 
    "Instead, they will be counting on the politicians to do the
minimum it takes to avoid the most ominous deadlines from
inflicting maximum harm to the economy."
    
    OIL SAGS UNDER STOCKPILE RISE
    U.S. crude oil stocks were up 2.62 million barrels last
week, according to the Energy Information Administration's (EIA)
weekly inventory report. 
    Gasoline stocks rose 1.74 million barrels and distillate
stocks were off 1.04 million barrels, the EIA said.  
    "It is definitely a negative report and bearish for crude
oil as supplies continue to go higher," said Phil Flynn, analyst
at Price Futures Group in Chicago.
    U.S. crude oil futures settled down 2 cents at $96.62
per barrel. London's Brent finished up 21 cents at
$116.73. 
    Oil was also pressured by the dollar's rise against the euro
 ahead of the European Central Bank (ECB) policy meeting
on Thursday. A stronger dollar makes commodities denominated in
the U.S. currency less affordable for holders of the euro.
 
    The ECB is expected to keep interest rates at a record low
of 0.75 percent. But investors will focus more on whether
policymakers were worried about the impact of the euro's recent
strength on the euro zone's most fragile economies.
    Recent economic trends suggested the euro zone had turned a
corner, with this week's strong Markit Eurozone Composite PMI
data headlining activity. But worries persist about political
conflicts in Italy and Spain and how that could affect recovery.
    
    SUGAR, COFFEE HURT BY SURPLUS SUPPLY
    Raw sugar closed down for a third day after traders at an
industry conference in Dubai widely forecast a price drop this
year due to a lack of demand from Russia and strong supplies
from top producer Brazil.
    The most-active raw sugar futures contract in New York,
March, settled down 0.37 cent, or 2 percent, at 18.19
cents a lb. Total volume was heavy at around 156,000 lots, more
than double the 250-day average, preliminary Thomson Reuters
data showed.
    Jamal Al Ghurair, managing director of Al Khaleej Sugar and
head of the Dubai refinery, told Reuters in an interview on
Sunday he expected U.S. sugar prices to fall to 16 cents per lb
this year -- about 15 percent below current
levels. 
    March arabica coffee in New York ended down 1.95
cents, or 1.4 percent, at $1.4210 per lb. Preliminary data
pegged total volume at a heavy 38,287 lots, up more than 70
percent from the 250-day average.
    "It is a similar situation (to sugar). This is definitely a
market that is very well supplied," said Tobias Merath, global
head of commodity research at Credit Suisse. 
    
 Prices at 3:53 p.m. EST (2053 GMT)      
                             LAST/      NET    PCT     YTD
                             CLOSE      CHG    CHG     CHG
 US crude                    96.79     0.15   0.2%    5.4%
 Brent crude                116.90     0.38   0.3%    5.2%
 Natural gas                 3.418    0.019   0.6%    2.0%
 
 US gold                   1677.70     5.30   0.3%    0.1%
 Gold                      1677.65     5.05   0.3%    0.2%
 US Copper                  374.05    -2.95  -0.8%    2.4%
 LME Copper                8245.00   -25.00  -0.3%    4.0%
 Dollar                     79.731    0.243   0.3%    3.9%
                               
 
 US corn                    722.50    -6.50  -0.9%    3.5%
 US soybeans               1487.50    -8.00  -0.5%    4.8%
 US wheat                   761.50     4.00   0.5%   -2.1%
 
 US Coffee                  142.10    -1.95  -1.4%   -1.2%
 US Cocoa                  2223.00   -23.00  -1.0%   -0.6%
 US Sugar                    18.19    -0.37  -2.0%   -6.8%
 
 US silver                  31.877    0.002   0.0%    5.5%
                               
 US palladium               764.80    -0.65  -0.1%    8.7%
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