February 25, 2014 / 10:01 PM / in 4 years

COMMODITIES-Natgas, cotton whipped by profit-taking; meat prices up

(Reuters is considering dropping the daily commodities wrap
after March 10 and publishing the report on a discretionary
basis. Please send any comments on this move to Josephine Mason
at josephine.mason@thomsonreuters.com)
    * Natgas loses 18 pct in 2 days; YTD gain more than halved
    * Cotton down 2 pct after hitting 6-month high Monday
    * Gasoline, cocoa, crude oil other major losers on Tuesday
    * Lean hogs, live cattle and corn among few winners

    By Barani Krishnan
    NEW YORK, Feb 25 (Reuters) - Natural gas futures slumped for
a second straight session on Tuesday, slashing year-to-date
gains, while cotton prices also fell in a broad commodities
selloff sparked by profit-taking.
    Gasoline, cocoa and crude oil were
other markets that closed sharply lower for the session, losing
about 1 percent each.
    Gainers were few. Futures of meat products and livestock
such as lean hogs and live cattle rose more than 
1 percent on concerns of tight supply. Corn, a base for
animal feed, also rose, reversing early losses.  
    The 19-commodity Thomson Reuters/Core Commodity Index
 shed 0.2 percent, retreating from its one-year high in
the previous session.
    Natural gas lost the most, extending Monday's selloff in its
worst two-day slide in 11 years, as traders abandoned the
market's front-month contract before its expiry to take profit. 
   
    March natural gas on the New York Mercantile Exchange 
settled down 6.4 percent at $5.096 per million British thermal
units, after sliding more than 10 percent earlier in the
session. On Monday, the contract lost more than 11 percent,
bringing cumulative declines over the two days to 18 percent.
    The losses cut sharply into year-to-date gains in natural
gas. From a near 50 percent gain on the year early last week,
natural gas is up only about 20 percent now.
    The front-month contract also hit a two-week bottom of
$4.788 on Tuesday, after setting a five-year high of $6.493 on
Monday, before the two-day selloff began.
    
    VOLATILITY BEGETS VOLATILITY
    "The volatility has attracted speculators that led to more
volatility," Aaron Calder, senior market analyst at Gelber &
Associates, said, referring to the action in natural gas.
    "We had a run-up to $6.50 on some very bullish weather
forecasts and then we saw selling by producers and profit taking
from those holding long positions." 
    U.S. cotton closed down more than 2 percent, its sharpest
drop in a month, as speculators shed some long positions the day
after the market hit six-month highs.
    Traders said the market, which had pierced above the
90-cent/lb mark on Monday amid fears of tight supplies in the
fiber, could drop further in the near term before regaining
strength.
    "We've been in an uptrend since November and today we broke
that trendline, triggering a lot of stop-loss selling," said
Jobe Moss, cotton broker at Moss Capital Management in Lubbock,
Texas.
    "I'm bearish myself and I think this market may have very
well seen its top. But the price keeps going up, so we could
recover after some losses."
    The most-active May cotton contract on ICE Futures U.S.
 settled down 1.75 cents, or 2.2 percent lower, at 87.35
cents per lb. It had fallen 3 percent earlier, to a Feb. 7 low
of 86.55 cents. The decline of more than 2 percent was the
contract's sharpest drop in a day since Jan. 27. 
    
    Prices at 4:05 p.m. EST (2105 GMT)      
                             LAST/      NET    PCT
                             CLOSE      CHG    CHG
US crude             101.98    -0.84  -0.8%
Brent crude         109.50    -1.14  -1.0%
Natural gas           5.096   -0.349  -6.4%
                                                          
US gold             1343.00     4.70   0.4%
Gold                1341.06     4.34   0.3%
US Copper              3.26    -0.01  -0.4%
LME Copper         7064.50   -12.50  -0.2%
Dollar               80.157   -0.042  -0.1%
CRB              301.579   -0.617  -0.2%
                                                          
US corn               455.75     4.25   0.9%
US soybeans          1399.00    12.50   0.9%
US wheat              615.00    -2.75  -0.5%
                                                          
US Coffee            175.65     0.05   0.0%
US Cocoa            2899.00   -36.00  -1.2%
US Sugar              17.34    -0.07  -0.4%
                                                          
US silver            21.963   21.742   1.6%
US platinum         1442.60     1.20   0.0%
US palladium         736.10    -6.95  -0.9%

 (Editing by Matthew Lewis)

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