COMMODITIES-Precious, base metals lead losses as dollar firms

Thu Oct 31, 2013 6:37pm EDT

* Silver sees largest daily loss in 6 weeks
    * Corn sets 3-year low on expectations of a record harvest
    * Coffee hits fresh 4-1/2 year low on increase in supplies

    By Marina Lopes
    NEW YORK, Oct 31 (Reuters) - Base and precious metals led
commodities lower on Thursday, with silver down 5 percent in its
worst daily performance in six weeks, as the dollar gained and
investors squared their books ahead of the month's end.
    A sharp rise in the dollar index broadly pressured
commodities after data showed business activity in the U.S.
Midwest surged past expectations in October, countering recent
evidence of soft economic growth. 
    That came after the Federal Reserve on Wednesday dropped a
reference to tightening financial conditions in its post-meeting
statement, bolstering views that the U.S. central bank could
roll back stimulus sooner than many expected. 
    In recent weeks, investors expected tapering of the stimulus
would not start until March 2014.    
    Arabica coffee fell to a 4-1/2 year low on
expectations of a bumper harvest in top-grower Brazil and
notched its biggest monthly drop since November last year.
    The oversupplied market has lost ground every month this
year except for January and September.
    In grains, corn futures prices sank to a three-year
low and finished October down 3 percent, while soybean futures
 also fell, on predictions of further increases to a
potentially record-high crop. 
    Brent crude futures dropped more than $1 a barrel, reversing
the previous session's gains, as traders booked profits and
turned their focus to the end of the U.S. refinery maintenance
season, which is expected to boost demand for U.S. crude. ]
    The Thomson Reuters/Core Commodity CRB index, 
closed down 0.77 percent, weighed by losses in 15 of the 19
commodities it tracks.
    U.S. equities ended the day lower, but posted gains for
October.
    The euro headed for its biggest one-day drop against the
dollar in more than six months as a sharp decline in euro-zone
inflation and record high unemployment stoked speculation that
the European Central Bank may ease further.
    "We are seeing some liquidation (in precious metals) on the
dollar rise and higher Treasury yields. Uncertainty in the
equities market is also prompting some gold investors to take
profits at the end of the month," said Tom Power, senior
commodity broker at RJO Futures.
    
    METALS DOWN
    Silver and gold were the weakest performing commodities on
Thursday as data showed business activity in the U.S. Midwest
surged past expectations in October, countering recent evidence
of soft economic growth.  
    For the month, gold ended October just 0.2 percent lower,
its decline limited by economic uncertainty over a partial U.S.
government shutdown and Washington's delay in raising the U.S.
debt ceiling.
    Copper was hit by selling after the Fed's policy outlook was
less dovish than some had expected, while growing supply and
weak demand also weighed on the outlook for the metal. 
    Benchmark copper on the London Metal Exchange closed
at $7,250 a tonne, down from a close of $7,289 on Wednesday
    Copper has traded in a $7,000-$7,420 range since early
August due to swelling supply and slower demand growth in China
and is on track to post its first monthly fall since June. 
    
    CORN HITS 3-YEAR LOW    
    U.S. corn futures slumped to their lowest levels in more
than three years as the large harvest under way in the United
States overshadowed blockbuster export sales. 
    An influx of grain from the advancing harvest was expected
to replenish crop inventories that were drained by strong demand
following a historic U.S. drought last year.
    Soybean futures also fell under harvest pressure, with some
traders expecting the U.S. Department of Agriculture to increase
its crop estimates in a monthly production report on Nov. 8. 
    The corn crop is already estimated to be record-sized and
the soy crop the fourth largest in history.
    "Everybody's expecting big numbers and they'll probably get
them," Jack Scoville, president of Price Futures Group, said
about USDA production estimates.
    Chicago Board of Trade December corn futures closed down 2
cents, or 0.5 percent, at $4.28-1/4 a bushel and hit a session
low of $4.27, below a three-year low of $4.28-1/4 reached on
Tuesday. The contract lost 3 percent during the month.

    COFFEE SINKS
    Arabica coffee on ICE touched a four-and-a-half year low,
falling for the 13th straight day on a wave of automatic sell
orders as a lack of any new fundamentals kept the over-supplied
market's bearish tone intact.
    Arabica futures ended October down 7.3 percent, the spot
contract's weakest monthly performance since November 2012 as
the market maintained its long-term trend lower on abundant
global supplies.
    The contract has dropped nearly 27 percent in 2013 so far,
making it the second-weakest performer, next to corn, in the
commodities market.
    Favorable weather for the vital flowering phase of top
grower Brazil's coffee trees has supported expectations for a
third successive large crop. 
    This, combined with the expectation for a record robusta
crop from Vietnam's current harvest and an improved yield in top
washed-arabica grower Colombia, is keeping world bean prices
under pressure.
    "We're generally pretty bearish on coffee, given you've got
booming supply from Brazil and South America generally," said
Tom Pugh of Capital Economics.
        
 Prices at 6:04 p.m. EDT (2204 GMT)      
                              LAST/      NET    PCT     YTD
                              CLOSE      CHG    CHG     CHG
 US crude                     96.23    -0.15  -0.2%    4.8%
 Brent crude                 108.90    -0.96  -0.9%   -2.0%
 Natural gas                  3.581    0.000   0.0%    6.9%
 
 US gold                    1323.70   -25.60  -1.9%  -21.0%
 Gold                       1322.44    -0.75   0.0%  -21.0%
 US Copper                     3.30    -0.03  -0.8%   -9.6%
 LME Copper                 7249.00   -41.00  -0.6%   -8.6%
 Dollar                      80.231    0.454   0.6%    4.5%
 CRB                        277.863   -2.153  -0.8%   -5.8%
 
 US corn                     428.25    -2.00  -0.5%  -38.7%
 US soybeans                1280.25    -7.50  -0.6%   -9.8%
 US wheat                    667.50    -7.50  -1.1%  -14.2%
 
 US Coffee                   105.40    -1.45  -1.4%  -26.7%
 US Cocoa                   2677.00    17.00   0.6%   19.7%
 US Sugar                     18.32     0.00   0.0%   -6.1%
 
 US silver                   21.867                  -27.7%
 US platinum                1448.40   -31.50   0.0%   -5.9%
 US palladium                736.80   -12.70  -1.7%    4.8%
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