COMMODITIES-Gold leads selloff after U.S. shutdown; sugar jumps

Tue Oct 1, 2013 4:39pm EDT

By Barani Krishnan
    NEW YORK, Oct 1 (Reuters) - Gold, copper, crude oil and a
number of other commodities fell sharply on Tuesday after the
U.S. government's partial shutdown caused investors to sell and
discouraged others from buying.
    Talk that a commodities fund was having to liquidate
positions added to the pressure on gold.
    Gold sank 3 percent as some investors became frustrated at
the market's inability to rally after the U.S. government
shutdown. The safe-haven metal fell to its lowest in almost two
months after a rash of computer-triggered stop-loss sales.
 
    U.S. copper futures fell about 2 percent to a 1-week bottom.
Benchmark crude oil out of London closed nearly half a percent
lower.  
    The losses put commodities in the spotlight as the dollar 
<.DXY > was only slightly lower, while stocks on Wall Street
were higher..  
    "Today is the first day of the new month and of the new
quarter, and I think that some confidence was undermined by the
shutdown," said Mike Turek, a copper trader with Newedge.
    Congress missed a midnight deadline to agree on a spending
bill, resulting in up to 1 million U.S. government workers being
put on unpaid leave. 
    A rebalancing of commodity positions as the fourth quarter
began was cited as another reason for the commodities selloff.
    The Thomson Reuters-Jefferies CRB index, a closely
watched indicator for commodity prices, closed down half a
percent, with 14 of the 19 markets on the index settling in
negative territory. For the third quarter that ended on Monday,
the CRB rose 8 percent, its biggest quarterly gain in a year.
    
    GOLD DOWN ON HEAVY VOLUME
    The spot price of gold was down almost $40 to below
$1,290 an ounce by 3:30 p.m. EDT (1930 GMT), having hit a low of
$1,282.59 earlier.
    U.S. gold futures for December delivery settled down
3 percent at $1,286.10 an ounce on New York's COMEX.
    Speculation that a troubled fund was trying to exit its gold
positions was one reason for bullion's plunge, which occurred on
the back of heavy trading.
    Volume for gold futures on COMEX was about 20 percent above
the 30-day average, preliminary Reuters data showed. 
    "It's obvious it has to be a fund that is just now forced
into liquidation," said Jonathan Jossen, a floor trader in Comex
gold option.
    In copper, the three-month on the London Metal Exchange
 fell to $7,147 a tonne, the lowest in a week. It was
last bid at $7,198 against Monday's close of $7,302.
    In New York, COMEX copper for December settled down
1.5 percent at $3.274 a lb.
    On the agricultural front, corn fell to a three-year low and
soybeans a six-week low, more because of a U.S. government
report showing larger-than-expected grain stockpiles. 
    
    SUGAR AT MID-MAY HIGHS
    Sugar was one of the few commodities that rose, hitting
highs last seen in mid-May, despite a large delivery of the
sweetener.
    U.S. raw sugar for March closed up 1 percent at 18.32
cents a lb on ICE Futures US.
    The rally came after news that global agribusiness group
Louis Dreyfus Commodities had bought almost 1.5
million tonnes of raw sugar delivered against ICE's expired
October contract, the biggest in at least 24 years. 
    A London-based sugar broker initially thought the big
delivery was bearish to the market, raising questions on why a
single merchant would want so much of sugar. But other traders
said the deal signaled Louis Dreyfus' confidence that it could
find homes for its purchase. 
    "For somebody to take a lot of delivery, you would assume
they have a place to put that," said Michael McDougall, senior
vice-president at Newedge. 
    
 Prices at 3:50 p.m. EDT (1950 GMT)      
                              LAST/      NET    PCT     YTD
                              CLOSE      CHG    CHG     CHG
 US crude                    101.90    -0.43  -0.4%   11.0%
 Brent crude                 107.77    -0.60  -0.6%   -3.0%
 Natural gas                  3.609    0.049   1.4%    7.7%
 
 US gold                    1286.10   -40.90  -3.1%  -23.3%
 Gold                       1290.25   -36.69  -2.8%  -22.9%
 US Copper                     3.27    -0.05  -1.5%  -10.4%
 LME Copper                 7199.00  -103.00  -1.4%   -9.2%
 Dollar                      80.112   -0.107  -0.1%    4.4%
 CRB                        284.020   -1.521  -0.5%   -3.7%
 
 US corn                     439.00    -2.00  -0.5%  -37.1%
 US soybeans                1268.00   -14.75  -1.2%  -10.6%
 US wheat                    681.25     2.75   0.4%  -12.4%
 
 US Coffee                   114.10     0.40   0.4%  -20.7%
 US Cocoa                   2634.00    -6.00  -0.2%   17.8%
 US Sugar                     17.48     0.00   0.0%  -10.4%
 
 US silver                   21.124   20.907   1.6%  -30.1%
 US platinum                1381.70   -26.40   0.0%  -10.2%
 US palladium                717.90    -8.25  -1.1%    2.1%