NEW YORK, Sept 23 Commodity markets traded mixed on Monday, with supply increases hitting oil prices, demand increases lifting grains and metals down modestly on uncertainty about when the Federal Reserve will decide to reduce economic stimulus.
The 19-commodity Thomson Reuters-Jefferies CRB index finished the session down 0.44 percent, pressured by oil and metal prices. Higher grains and softs prices limited the decline.
Global oil prices slid about 1 percent, down by more than $1 per barrel. Traders cited higher crude output from Libya, Iraq and South Sudan and a possible thaw in U.S.-Iran relations.
Prices dropped despite upbeat economic data from China and Europe, with Brent crude futures settling at $108.16 per barrel, down $1.06 or 0.97 percent, and U.S. crude oil futures off $1,16 or 1.11 percent, closing at $103.59.
Copper prices fell for a second straight session as a weak euro and concerns about growing supply offset expectations of a rebound in demand from top consumer China.
While a flood of new orders helped European and Chinese firms in September, weaker U.S. factory activity tempered evidence of a healing global economy.
The dollar also slumped for a second straight session as William Dudley, president of the Federal Reserve Bank of New York, defended the U.S. central bank's decision last week to continue its easy money policy.
Dudley said the timeline Fed Chairman Ben Bernanke spoke of in June for scaling back the central bank's stimulus measures is "still very much intact," as long as the economy keeps improving. He noted that the Fed chief did not specify that the first bond buying reduction would come at the Fed's September meeting.
Gold edged lower on renewed worries that the U.S. Federal Reserve will begin cutting its bond-buying purchases as early as next month. An uncertain timeline for the Fed to unwind its monetary stimulus have led to increased volatility in the gold market.
"Gold is going to see more downward pressure as continued slow U.S. growth should allow the Fed to slowly ease out its position on stimulus," said head precious metals dealer at commodities brokerage Alliance Financial LLC.
Spot gold was down 0.22 percent at $1,322.07 an ounce by 4:34 p.m. EDT (2034 GMT).
In Chicago, U.S. wheat futures rose 1.1 percent, supported by rising global demand and a round of short-covering. Corn futures edged higher on spillover strength from wheat, but soybeans dipped on hopes that recent rains in the U.S. Midwest could boost final harvest yields.
Among soft commodities, ICE arabica coffee rose by the most in almost two weeks as investors covered short positions after last week's slide to four year lows and as rains in top grower Brazil threatened to hamper harvest of a bumper crop.