February 28, 2014 / 8:06 PM / 6 years ago

COMMODITIES-Arabica coffee, lean hogs lead February gains

(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)
    By Barani Krishnan
    NEW YORK, Feb 28 (Reuters) - Wheat prices rose about 3
percent to lead gains in U.S. commodities on Friday as the
dollar fell but the biggest monthly gains for February were
posted by arabica coffee, which rallied 40 percent on fears of
crop damage from Brazil's drought.
    Lean hogs, one of the smaller U.S. commodity markets, also
chalked up big monthly gains, rising almost 25 percent on
concerns of tighter supply.
    Weather worries and dwindling inventories have dominated
commodities markets this month, turning investors' attention to
the space as raw materials markets decoupled from equities. 
    Natural gas prices hit five-year peaks on extreme cold
temperatures; sugar jumped 12 percent on Brazil's crop-wilting
heat; and cattle raced to record highs on expectations of
transportation problems for livestock from snow-covered roads.
    The Thomson Reuters/Core Commodity Index, a
global indicator of basic resource prices, was up 7 percent for
February, its biggest monthly gain since Oct. 2011.
    Citigroup said in a recent research note that about $1.6
billion has entered the sector so far this saw versus record
outflows of about $50 billion in 2013.
    "The risk-on play in commodities is more alive than ever,"
said Adam Sarhan, chief executive of New York-based financial
advisory and boutique investment firm Sarhan Capital.
    "There's been a tremendous amount of risk appetite that's
returned to the space, a welcome sign after last year's
lackluster performance."
    The dollar drop's to a two-month low against the euro made
commodity traders more bullish on Friday as it made
dollar-denominated commodities more affordable to global buyers.
Front-month wheat in Chicago finished just under $6 a
bushel, up 3 percent on the day and nearly 8 percent on the
    Arabica coffee neared a 17-month peak, marking its biggest
monthly gain in nearly two decades as speculators continued to
bet on crop damage despite intermittent rain in Brazil.
    "If the weather continues to improve, the best you can hope
for is that production may stabilize" in coffee, said Jack
Scoville, vice president at Price Futures Group in Chicago.
    New York-traded arabica's most-active second month contract
 ended at $1.8030 per lb, up 41.7 percent for February in
the biggest monthly surge since June 1994. Year-to-date, arabica
coffee is up almost 60 percent. 
    Lean hogs hit an all-time high of $1.08650 a lb, up 3
percent for the session and 24 percent for the month, a day
after Russia said it would resume American pork imports.
    Live cattle prices eked out a new high too after another
round of winter weather forecast for the Midwest at the weekend
raised transportation concerns for livestock.
    The front-month live cattle contract in Chicago 
settled at $1.51950 a lb, up 2 percent on the day and 7 percent
on the month after hitting a record high at $1.53. 
    Prices at 2:50 p.m. EST (1950 GMT)      
                             LAST/      NET    PCT
                             CLOSE      CHG    CHG
US crude             102.52     0.12   0.1%
Brent crude         108.95    -0.01   0.0%
Natural gas           4.609    0.098   2.2%
US gold             1328.20     0.00   0.0%
Gold                1323.05    -8.01  -0.6%
US Copper              3.24     0.00   0.1%
LME Copper         7010.00   -15.00  -0.2%
Dollar               79.743   -0.542  -0.7%
CRB              302.426    0.836   0.3%
US corn               457.50     9.50   2.1%
US soybeans          1414.25    20.75   1.5%
US wheat              599.00    16.75   2.9%
US Coffee            179.80     1.05   0.6%
US Cocoa            2935.00     2.00   0.1%
US Sugar              16.47    -0.97  -5.6%
US silver            21.204   20.991   1.6%
US platinum         1446.80    -6.60   0.0%
US palladium         743.85     1.60   0.2%

 (Editing by David Gregorio)
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