Friday, March 5, 2010

COMMODITIES-Markets hit by dollar; soy, wheat down over 2 pct

* Strong dollar pressures commodities across board

* Soybeans, wheat down more than 2 percent each

* Copper down more than 1 percent, oil nearly 1 percent

* Coming Up - U.S. non-farm payroll data, due on Friday

By Barani Krishnan

NEW YORK, March 4 (Reuters) - U.S. agricultural commodities tumbled on Thursday and metals and oil declined too as a rebounding dollar fed concern about weak raw materials demand.

Weaker U.S. home sales also cast a shadow on recovery prospects for the world's largest economy.

Soybean and wheat prices fell about 2 percent each in U.S. futures trading. Copper lost more than 1 percent and crude oil nearly 1 percent.

Even cotton, a market that had traded near two-year highs in recent sessions, ended down more than 1 percent.

The 19-commodity Reuters-Jefferies CRB index, dominated by oil, settled down 1 percent.

Soybean futures posted their biggest drop in more than seven weeks, closing below a key support level at the 20-day moving average as a firm dollar weighed on prices.

The dollar rose against the euro on comments by the European Central Bank that reinforced the view that eurozone interest rates will remain low for now.

Chicago-traded soybean futures for May fell 21-1/2 cents to close at $9.42 a bushel, a drop of 2.2 percent. The contract closed at its lowest level since Feb. 9.

"The dollar is higher and that's bearish for everything," said Vic Lespinasse, analyst for

The dollar's value often decides the direction for commodity prices as a stronger U.S. currency means more costs for buyers using money like the euro. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Dollar vs commodities: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Chicago's soft red winter wheat for May delivery was down 13-1/2 cents, or 2.6 percent, at $5.02-1/4 a bushel, also was below its 20-day moving average.

"All of the news is bearish and there is quite a list. Exports are dropping and now India is talking about exporting wheat and corn, ethanol margins are getting hit ... there is just too much grain in the world," said Paul Haugens, veteran grains trader and a vice president for Newedge USA.

U.S. crude settled down 66 cents at $80.21 a barrel. Aside from the stronger dollar, another dampener for oil was data showing pending sales of existing U.S. homes down more than expected in January.

"The market was not responding well to the positive economic reports," said Tom Bentz, broker at BNP Paribas Commodity Futures Inc in New York.

"Once again the market is in $80/$81 range and can't sustain a rally," Bentz said.

Oil's next biggest lead will come from U.S. non-farm payroll report, due on Friday.

Economists polled by Reuters said the report was expected to show a loss of 50,000 jobs in February, compared with 20,000 job cuts in January. But some market watchers said an even greater number of job losses may have been priced into oil.

New York's most active copper contract for May. per lb.

On the London Metal Exchange, copper's benchmark contract for three-month delivery ended sharply lower at $7,370 a tonne, from $7,580 on Wednesday. (Editing by David Gregorio)

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