COMMODITIES-Markets defy strong dollar in broad rally

Wed Mar 27, 2013 5:50pm EDT

* Fifteen of CRB's 19 markets end up on own fundamentals
    * US crude on track for 5 pct gain for quarter and year
    * Corn futures hit 7-week high as ethanol stocks tumble
    * Gold moves above $1,600/ounce

    By Barani Krishnan
    NEW YORK, March 27 (Reuters) - Commodities staged one of
their broadest rallies of the year on Wednesday as market
fundamentals drove up oil, metals and agricultural futures
despite a stronger dollar, which usually tends to weigh on
prices.
    Crude oil futures in New York settled up for a fourth
straight day after being pressured initially by government data
pointing to higher stockpiles of oil in the United States, the
world's largest consumer of the commodity.
    On the agricultural side, corn futures hit seven-week highs
in Chicago as inventories for ethanol -- the corn-derived
biofuel -- fell to a 15-month low. Raw sugar climbed
slightly in New York, from near a 2-1/2-year bottom on Tuesday.
 
    Copper futures also edged higher in New York after
the benchmark three-month contract in London ended down
on concerns over the euro zone after this week's bailout of
Cyprus's banks. 
    
    GOLD RISES EVEN AS DOLLAR UP VS EURO
    Gold also rose, to above $1,600 an ounce, ignoring
the dollar's surge to a four-month high against the euro. A
stronger dollar usually weakens demand for dollar-denominated
commodities from holders of the euro. Gold typically moves
opposite to the dollar. 
    The euro sank on a weak Italian bond auction and concerns
that the rescue deal for Cyprus could become a template for
future bailouts in the euro zone. The worries over Europe
triggered safe-haven demand for gold, traders said. 
    With the Cyprus situation, "People don't know how things
will unfold and that uncertainty helps gold," Bernard Sin,
senior vice president at MKS Capital in London, said.
    While the day's gain on the Thomson Reuters-Jefferies CRB
index was modest at just about half a percent, the
session was set apart by the number of markets that closed up.
Fifteen of the CRB's 19 markets settled in positive territory,
making the rally one of the broadest for this year.
    
    US CRUDE RALLIES MORE THAN BRENT
    In oil, U.S. crude rose 24 cents to settle at $96.58
a barrel, after touching a five-week high at $96.84. The market
is on pace to finish both March and the first quarter up by
about 5 percent. 
    London's benchmark Brent crude rose 33 cents to
settle at $109.69 a barrel, after testing resistance near its
200-day moving average of $109.90. Brent was on target to close
March down about 3.6 percent and the quarter 1.2 percent lower.
    "One of the reasons why (U.S.) crude has been rallying
versus Brent was because of the trend of supplies falling at
Cushing, but this build in Cushing is weighing now," said Phil
Flynn, an analyst at Price Futures Group in Chicago.
    After trending lower in earlier weeks, U.S. crude
inventories rose 3.26 million barrels last week, according to
data from the Energy Information Administration that tracks
stockpiles at the delivery point for U.S. crude in Cushing,
Oklahoma. The build is nearly five times above the 700,000
barrels increase expected by analysts in a Reuters survey.
 
    
    CORN JUMPs AS ETHANOL STOCKS AT 15-MONTH LOW
    In grains markets, corn futures notched a seven-week high
after the ethanol stockpile plunged to a December 2011 low.
    Corn on the Chicago Board of Trade for May finished up
5 cents at $7.35-1/4 per bushel.
    Government data showed production of ethanol declined while
stocks of the grain-based biofuel dropped 5.5 percent in the
largest drawdown since July, which indicated strong corn demand
among blenders who mix ethanol into nearly every gallon of
gasoline sold in the United States. 
    The corn rally also came ahead of a closely watched crop
report due from the U.S. Department of Agriculture on Thursday.
The USDA will release estimates of U.S. spring plantings three
hours before trade halts for a three-day long weekend.
    
 Prices at 5:28 p.m. EDT (2128 GMT)      
                             LAST/      NET    PCT     YTD
                             CLOSE      CHG    CHG     CHG
 US crude                    96.69     0.24   0.3%    5.3%
 Brent crude                109.76     0.40   0.4%   -1.2%
 Natural gas                 4.068    0.077   1.9%   21.4%
 
 US gold                   1606.20    10.50   0.7%   -4.2%
 Gold                      1604.95     6.36   0.4%   -4.1%
 US Copper                  343.25     0.00   0.0%   -6.0%
 LME Copper                7606.00   -19.00  -0.2%   -4.1%
 Dollar                     83.202    0.319   0.4%    8.4%
                              
 
 US corn                    735.25     5.00   0.7%    5.3%
 US soybeans               1453.75     6.00   0.4%    2.5%
 US wheat                   736.75     5.25   0.7%   -5.3%
 
 US Coffee                  136.60    -1.00  -0.7%   -5.0%
 US Cocoa                  2150.00     4.00   0.2%   -3.8%
 US Sugar                    17.85     0.07   0.4%   -8.5%
 
 US silver                  28.612   -0.067  -0.2%   -5.3%
 US platinum               1579.80    13.80   0.9%    2.7%
 US palladium               768.30     6.90   0.9%    9.2%
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