May 1, 2013 / 8:56 PM / 4 years ago

COMMODITIES-Markets dive as May starts; Brent oil back below $100

6 Min Read

* CRB extends April's 3 pct loss on worrying US, China data
    * Brent crude down 2.4 pct for session, LME copper 3.7 pct
lower
    * Wheat tanks on profit-taking after April gains, soy down 2
pct

 (Updates with prices ending off their lows; adds Fed decision
to keep up bond buying)
    By Barani Krishnan
    NEW YORK, May 1(Reuters) - Oil, gold and copper tumbled on
Wednesday after renewed worries over the Chinese and U.S.
economies drove investors to sell raw materials on the first
trading day of May, a month known for historically weak
commodity prices.
    While U.S. Treasuries rallied at the expense of commodities
and stocks as investors sought safe-havens, the Federal
Reserve's pledge to keep buying $85 billion of government bonds
a month helped energy, metals and agricultural markets end off
their lows.  
    Bond-buying by the Fed had fueled investment activity in
commodities for more than two years now. The central bank's
commitment to continue with that stimulus to help U.S. recovery
was seen as positive to natural resource prices, analysts said.
 
    Benchmark Brent crude oil out of London closed down
2.4 percent at $99.95 a barrel, just below the $100 mark. It had
fallen nearly 4 percent at its session low, after data showing
record high stockpiles of crude in the United States, the
world's top oil consumer.
    In copper, the three-month contract on the London Metal
Exchange finished down 3.7 percent at $6,795 a tonne,
breaking the 7,000 a tonne support. 
    U.S. gold futures fell more than 2 percent initially
before closing down 1.8 percent, at $1,446.20 an ounce, after
the Fed decision to stick to its monetary easing plan helped 
pare losses in gold.    
    The Thomson Reuters-Jefferies CRB index, a
bellwether for commodity prices, settled down 1.7 percent, after
finishing April about 3 percent lower. Fourteen of the CRB's 19
components finished in negative territory, with cocoa,
lean hogs and cattle being the only gainers.
    May is usually a time for weak prices and activity in 
financial markets, as traders go on holiday with the advent of
warmer weather in the United States and other parts of the
northern hemisphere. That weakness is sometimes exacerbated by
concerns about the economy, like now, and how demand for raw
materials would fare.
    The CRB lost nearly 11 percent in May last year and almost 6
percent the previous year.
    
    TIME TO "SELL AND GO AWAY"?
    "If this is the time to 'sell in May and go away' we
certainly seem to be off to a fast start," said Edward Meir,
metals analyst at INTL Fc Stone in New York.
    While Fed stimulus action periodically helps commodities, he
said "any price bounce will likely prove short-lived as
commodity investors do not seem to be responding as they once
were to easy money, but are instead pining to see more evidence
of growth setting in."
    Signs of stagnating growth in China, euro zone debt trouble
and uncertainty about further U.S. economic stimulus led
commodities to one of their sharpest sell-offs last month. Brent
crude fell below $100 the first time in nine months, gold had
its biggest loss in dollar terms and copper sank to an 18-month
low during the tumble. All three markets finished at least 7
percent lower for April. 
    On Wednesday, more data emerged to show U.S. manufacturing
growth had slowed last month, underlining worries that the No. 1
economy cooled as the second quarter got underway.
 
    In China, manufacturing orders also showed a surprise drop
in April that cast concerns about growth in one of the world's
top commodities consumers. 
    "It's the same picture of relative slow demand," said
Olivier Jakob, an analyst at Petromatrix.
    Agricultural prices also tanked on Wednesday, following the
slide in industrial commodities such as oil and metals. U.S.
soybean futures settled down nearly 2 percent for their
sharpest loss in a month due to the weaker economic picture in
China -- the world's largest market for soybeans.
    Wheat, one of April's stronger performers with a
5-percent gain for the month, fell more than 1 percent on
profit-taking. 
    
 Prices at 4:35 p.m. EDT (2034 GMT)      
                             LAST/      NET    PCT     YTD
                             CLOSE      CHG    CHG     CHG
 US crude                    90.96    -2.50  -2.7%   -0.9%
 Brent crude                 99.81    -2.56  -2.5%  -10.2%
 Natural gas                 4.326   -0.017  -0.4%   29.1%
 
 US gold                   1446.20   -25.90  -1.8%  -13.7%
 Gold                      1456.40   -20.20  -1.4%  -13.0%
 US Copper                  308.00   -10.75  -3.4%  -15.7%
 LME Copper                6795.00  -260.00  -3.7%  -14.3%
 Dollar                     81.606   -0.140  -0.2%    6.3%
                             
 
 US corn                    681.75    -0.75  -0.1%   -2.4%
 US soybeans               1437.50   -30.25  -2.1%    1.3%
 US wheat                   710.50   -11.25  -1.6%   -8.7%
 
 US Coffee                  134.70    -0.40  -0.3%   -6.3%
 US Cocoa                  2415.00    47.00   2.0%    8.0%
 US Sugar                    17.33    -0.27  -1.5%  -11.2%
 
 US silver                  23.343   -0.842  -3.5%  -22.8%
 US platinum               1469.50   -37.70  -2.5%   -4.5%
 US palladium               684.75   -13.05  -1.9%   -2.6%
 
 (Editing by Marguerita Choy and David Gregorio)

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