Tags: Dollar Rally Punishes Oil | Gold USDA Hurts Grains

Dollar Rally Punishes Oil, Gold

Friday, 10 May 2013 03:57 PM

A resurgent dollar weighed heavily on commodities on Friday, causing oil its biggest loss in more than a week and pulling gold prices to a 2-week low, while data indicating plentiful U.S. crop supplies extended the toll on grains futures.

Copper bucked the trend, closing up for the day and a third straight week, as stockpiles of the metal fell in warehouses monitored by trading exchanges in London and Shanghai.

By 2:00 p.m. EDT (1800 GMT), the 19-commodity Thomson Reuters-Jefferies CRB index was down about 1 percent for the session and week. Many commodities tracked by the CRB fell about 2 percent or more, including crude oil, gold, wheat, corn, coffee, cocoa and cotton.

Traders blamed the U.S. dollar for much of the declines.

A strong dollar makes dollar-denominated commodities, such as oil and copper, pricier when purchased with other currencies, weighing on their demand outside of the United States.

The dollar rallied to a 4-1/2-year high against the yen on Friday on data showing Japanese investors buying more foreign assets. Further dollar-yen appreciation was likely as Japan's aggressive monetary easing takes effect, currency traders said. The euro also fell against the dollar.

"The higher dollar is putting on pressure - there's a lot of volatility in currencies and there is no strong underlying demand for oil," said Olivier Jakob of Petromatrix in Zug, Switzerland.

Stockpiles of crude oil in the United States, the world's largest oil consumer, hit another record high last week due to growing domestic production, government data showed.

U.S. crude oil traded below $95 a barrel, versus Thursday's close of $96.39.

Brent crude out of Europe's North Sea, the more important benchmark for oil, hovered at around $102 a barrel, after Thursday's close at $104.47. The session low was $101.56. The drop in Brent was the largest since the market fell below $100 on May 1 on renewed worries about U.S. and China growth.

Gold fell 2.5 percent to a two-week low, on track for its biggest one-day drop since mid-April, as a breach of key chart levels prompted heavy selling in the precious metal.

Traders said sell stops - automatic sale orders placed by traders at pre-set levels to limit losses - were triggered as gold broke support at $1,445 and $1,440 an ounce, prompting a sharp move down to session lows of $1,428.40.

"If we close below $1,425, we could see $1,400," said Afshin Nabavi, head of trading at London's MKS. "A break below that level could see the market going very messy."

Gold had plunged to below $1,322 an ounce on April 16, its lowest in more than two years, after stop-sell orders below $1,525 triggered heavy liquidation.

Corn and wheat tumbled in Chicago trading after the U.S. Department of Agriculture said it expected the domestic corn crop to deliver a record 14.14 billion bushels despite lower yields from a late start to the planting season.

U.S. corn ending-stocks for 2013/14 would hit 2.004 billion bushels, nearly triple the 759 million forecast for the Aug. 31 end of this marketing year, and marginally above the trade estimates, the USDA said.

The agency also forecast a record large crop for soybeans that will end 3 years of punishingly tight supplies.

Corn for July delivery on the Chicago Board of Trade stood at around $6.35 a bushel, versus Thursday's close of $6.48-3/4.

July wheat hovered at around $7.05 a bushel, versus the previous settlement of $7.23-1/2.

Soybeans for July were slightly lower, at around $14.03 a bushel versus Thursday's close above $14.08.

Prices at 2:01 p.m. EDT (1801 GMT)


CHG CHG CHG US crude 94.78 -1.63 -1.7% 3.2% Brent crude 102.84 -1.63 -1.6% -7.4% Natural gas 3.917 -0.065 -1.6% 16.9%

Gold 1437.01 -20.69 -1.4% -14.2% US Copper 335.65 1.60 0.5% -8.1% LME Copper 7391.00 37.00 0.5% -6.8% Dollar 83.188 0.395 0.5% 8.4%

US corn 691.00 -3.50 -0.5% -1.0% US soybeans 1493.25 2.00 0.1% 5.3% US wheat 697.00 -19.25 -2.7% -10.4% US Coffee 144.20 -3.70 -2.5% 0.3% US Cocoa 2305.00 -44.00 -1.9% 3.1% US Sugar 17.39 -0.08 -0.5% -10.9% US silver 23.630 -0.281 -1.2% -21.8% US platinum 1487.90 -28.60 -1.9% -3.3% US palladium 705.25 -9.50 -1.3% 0.3% (Editing by Nick Zieminski)

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Dollar Rally Punishes Oil, Gold; USDA Hurts Grains
Dollar Rally Punishes Oil,Gold USDA Hurts Grains
Friday, 10 May 2013 03:57 PM
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