* U.S. crude at 9-month high on fear Iraq tension may hit supply
* Nickel at 2-month low on talk Indonesia may lift export ban
* Platinum, palladium suffer biggest loss in nearly a year
* Big supplies hit sugar, wheat; cocoa soars then slips
By Barani Krishnan
NEW YORK, June 12 (Reuters) - Commodity futures saw some of their most volatile moves for the year on Thursday, with U.S. crude oil at nine-month highs on worries escalating violence in Iraq could disrupt supplies, while most other markets hit multi-month lows on weaker fundamentals.
Nickel sank to a two-month low of $17,700 a tonne on persistent profit-taking after months of rallying on expectations an Indonesian ban on ore exports would lift the physical market. Copper meanwhile hit a 1-1/2 month low of around $6,614 a tonne.
Platinum fell 3 percent to $1,438 an ounce and palladium tumbled 4 percent to under $824 an ounce, their biggest daily losses in nearly a year. The platinum metals group suffered declines after South African producers said they had reached "in principle" undertakings with mine workers' unions to end a crippling five-month strike.
Raw sugar hit an eight-week bottom of 16.71 cents a lb, pressured by a large surplus supply. U.S. wheat hovered near a 3-1/2 month low of below $5.87 a bushel amid ample inventories and signs of stiff export competition from Black Sea region grains.
Cocoa soared to a 33-month peak of $3,119 a tonne, as confectioner Mars Inc predicted higher chocolate demand, before profit-taking took the market down 2 percent for its sharpest loss in six weeks.
The Thomson Reuters/Core Commodity CRB Index was up 0.7 percent by 12:45 p.m. ET (1645 GMT) as the rally in oil was partially offset by losses elsewhere on the complex. While the CRB represents 19 commodities, nearly a quarter of its weighting is made up of U.S. crude.
Oil prices surged on growing alarm that Sunni rebels had overrun Iraq's second-largest city and moved in on its largest refinery at Baiji.
U.S. crude was up 1.5 percent at $105.92 after touching a Sept. 19 peak at $106.53. Brent crude jumped 2 percent to above $112 a barrel, near a three-month high.
The oil markets showed muted reaction earlier this week to news about the Sunni rebels, an al Qaeda splinter group, but began to take more notice as they seemed to make rapid advances toward the Shi'ite-led government in Baghdad.
"I would entirely ascribe this move to the insurrection in the north of Iraq," Christopher Bellew, a trader at Jefferies Bache, said. "If this conflict knocked out Iraq as an exporter, that would have significant impact on prices."
Even so, some analysts pointed out that most of Iraq's oil output and export facilities were in Shi'ite areas in the south of the country, where al Qaeda-inspired groups had little support. (Editing by Meredith Mazzilli)