* US crude stockpiles up 3 mln barrels over market forecast
* Wheat hits 8-month lows as heavy snows ease crop dryness
* Base metals copper, zinc slip as dollar rallies vs euro
* Gold up on South Korean cenbank buying, bargain hunting
By Barani Krishnan
NEW YORK, March 6 Oil prices fell on Wednesday,
a day after posting their biggest gains since December, after
worries about creeping U.S. crude stockpiles, and grains markets
slumped as heavy snows relieved dryness in America's crop belt.
Prices of base metals such as copper and zinc
slipped as the dollar hit a one-week high against the
euro. A stronger dollar technically makes commodities priced in
the greenback costlier for holders of other currencies.
Precious metals bucked the lower trend, with gold and
silver rising on bargain hunting by investors after last
week's losses. Gold particularly rose on news of another bullion
purchase by South Korea's central bank in February, and on hopes
that the outflow from gold-backed exchange-traded funds will end
The Thomson Reuters-Jefferies CRB index, a global
benchmark for commodity prices, settled down 0.6 percent after
falling to its lowest levels since July 12.
Fifteen of the 19 markets tracked by the CRB ended lower.
Corn and wheat fell the most, by about 3 percent each.
RISING US INVENTORIES PRESSURE OIL
Oil prices fell more than $1 per barrel after U.S.
government data showed domestic crude inventories rose much more
U.S. crude stocks rose 3.83 million barrels in the week to
March 1, the Energy Information Administration (EIA) said in its
weekly report. Analysts had forecast a 500,000-barrel build for
last week in the United States, the world's largest oil
The rise in U.S. crude stockpiles came as refinery
utilization fell during winter plant maintenance season and as
the country's oil imports dropped last week.
"This is all definitely putting some pressure on (crude oil)
in the short term," said Phil Flynn of Price Futures Group in
Chicago. "The crude market hasn't bottomed yet."
U.S. crude settled down 39 cents, or 0.4 percent, at
$90.43 per barrel.
Benchmark Brent crude, traded in London, finished
down 55 cents, or 0.5 percent, at $11.06.
WET WEATHER WEIGHS ON WHEAT, CORN
U.S. wheat futures sank to their lowest level in more than
eight months as heavy snows eased dryness in key growing areas
and boosted harvest estimates.
Optimism soared after a storm dumped 5 to 10 inches of wet
snow on the Midwest on Tuesday, the latest round of
precipitation following the worst U.S. drought in more than 50
years. Additional moisture is expected to provide more relief to
bone-dry soils later this week.
"Up until a month ago, the ability to produce wheat this
coming spring was in doubt to put it mildly," said Jack
Scoville, vice president of Price Futures Group. "All of a
sudden that situation's changed."
Chicago-traded wheat for May delivery tumbled 22-1/2
cents, or 3.2 percent, at $6.83-3/4 a bushel.
The U.S. hard red winter wheat crop, which is used to make
bread, had been stressed by dryness in the Great Plains since it
was planted last fall. However, crop forecaster Lanworth raised
its forecast for U.S. wheat production 6 percent due to
increased precipitation in the southern and central Plains.
Global wheat output also could climb to record highs in the
coming year due to improved crop prospects for key producers
that were hit by severe droughts last year, said Joe Glauber,
chief economist for the U.S. Department of Agriculture.
"This is an encouraging sign to have a couple of major snow
storms, and it looks like slow melting snow, which is another
positive, but we will see," he told Reuters.
Improving moisture weighed on corn prices ahead of the U.S.
spring planting season.
Chicago-traded corn for May slid 20-1/2 cents, or 2.9
percent, to $6.88-1/2 a bushel.
Corn for December, representing the crop to be
harvested in fall, ended down 1.4 percent at $5.44-1/2 after
dropping to a near nine-month low.
Prices at 4:11 p.m. EST (2111 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US crude 90.43 -0.39 -0.4% -1.5%
Brent crude 111.06 -0.55 -0.5% 0.0%
Natural gas 3.470 -0.059 -1.7% 3.6%
US gold 1574.90 0.00 0.0% -6.0%
Gold 1581.96 6.90 0.4% -5.5%
US Copper 347.40 -2.25 -0.6% -4.9%
LME Copper 7690.00 -82.00 -1.1% -3.0%
Dollar 82.486 0.399 0.5% 7.4%
US corn 708.00 -24.00 -3.3% 1.4%
US soybeans 1484.50 -12.00 -0.8% 4.6%
US wheat 676.25 -20.00 -2.9% -13.1%
US Coffee 141.25 0.10 0.1% -1.8%
US Cocoa 2042.00 -17.00 -0.8% -8.7%
US Sugar 18.20 0.01 0.1% -6.7%
US silver 28.803 0.199 0.7% -4.7%
US platinum 1579.80 -5.90 -0.4% 2.7%
US palladium 740.05 5.45 0.7% 5.2%