COMMODITIES-Broad declines on dollar's rise, softs stockpiles
* CRB index down 0.4 pct, reversing Tuesday gain
* US crude ends a touch lower as inventories rise
* Sugar, arabica coffee down on surplus supply
NEW YORK, Feb 6 (Reuters) - Commodities fell broadly on Wednesday, retreating from gains posted in the previous session, as a rebounding dollar and increased supplies of some raw materials weighed on prices. Oil closed a touch lower in New York as the euro fell against the dollar on worries that recent strength in the single European currency could hurt recovery in troubled economies such as Spain. Data showing higher U.S. crude stockpiles for last week also proved bearish. Brent crude in London settled slightly higher in choppy trading. Abundant supplies of sugar and premium-grade arabica coffee weighed on those soft commodities. Raw sugar moved closer to the 2-1/2 year low it plumbed last month on prospects for a third successive global sugar surplus in the 2012/13 season. "Last week's short-covering rally appears to have run out of steam," Luke Mathews, a commodities strategist who follows the sugar market for the Commonwealth Bank of Australia, said in a commentary. The Thomson Reuters-Jefferies CRB index settled down 0.4 percent as the global commodities indicator completely reversed Tuesday's gain. Thirteen of the CRB's 19 components settled in negative territory. Nickel, sugar and lean hogs lost about 2 percent each and orange juice, cocoa, corn and aluminum about 1 percent. Attention in commodities appears to have returned to core supply-demand issues as the U.S. fiscal worries that dominated trading at the end of last year abated, analysts said. The U.S. Congressional Budget Office said on Tuesday it saw the federal deficit coming in at around $845 billion this year, well below the $1.1 trillion shortfall of 2011. Referring to the U.S. deficit, INTL FC Stone metals analyst Edward Meir said in Wednesday's market note: "It seems that investors are no longer anticipating any type of grand bargain, which means they are not going to push the markets sharply higher or lower. "Instead, they will be counting on the politicians to do the minimum it takes to avoid the most ominous deadlines from inflicting maximum harm to the economy."
OIL SAGS UNDER STOCKPILE RISE U.S. crude oil stocks were up 2.62 million barrels last week, according to the Energy Information Administration's (EIA) weekly inventory report. Gasoline stocks rose 1.74 million barrels and distillate stocks were off 1.04 million barrels, the EIA said. "It is definitely a negative report and bearish for crude oil as supplies continue to go higher," said Phil Flynn, analyst at Price Futures Group in Chicago. U.S. crude oil futures settled down 2 cents at $96.62 per barrel. London's Brent finished up 21 cents at $116.73. Oil was also pressured by the dollar's rise against the euro ahead of the European Central Bank (ECB) policy meeting on Thursday. A stronger dollar makes commodities denominated in the U.S. currency less affordable for holders of the euro.
The ECB is expected to keep interest rates at a record low of 0.75 percent. But investors will focus more on whether policymakers were worried about the impact of the euro's recent strength on the euro zone's most fragile economies. Recent economic trends suggested the euro zone had turned a corner, with this week's strong Markit Eurozone Composite PMI data headlining activity. But worries persist about political conflicts in Italy and Spain and how that could affect recovery.
SUGAR, COFFEE HURT BY SURPLUS SUPPLY Raw sugar closed down for a third day after traders at an industry conference in Dubai widely forecast a price drop this year due to a lack of demand from Russia and strong supplies from top producer Brazil. The most-active raw sugar futures contract in New York, March, settled down 0.37 cent, or 2 percent, at 18.19 cents a lb. Total volume was heavy at around 156,000 lots, more than double the 250-day average, preliminary Thomson Reuters data showed. Jamal Al Ghurair, managing director of Al Khaleej Sugar and head of the Dubai refinery, told Reuters in an interview on Sunday he expected U.S. sugar prices to fall to 16 cents per lb this year -- about 15 percent below current levels. March arabica coffee in New York ended down 1.95 cents, or 1.4 percent, at $1.4210 per lb. Preliminary data pegged total volume at a heavy 38,287 lots, up more than 70 percent from the 250-day average. "It is a similar situation (to sugar). This is definitely a market that is very well supplied," said Tobias Merath, global head of commodity research at Credit Suisse.
Prices at 3:53 p.m. EST (2053 GMT)
LAST/ NET PCT YTD CLOSE CHG CHG CHG US crude 96.79 0.15 0.2% 5.4% Brent crude 116.90 0.38 0.3% 5.2% Natural gas 3.418 0.019 0.6% 2.0%US gold 1677.70 5.30 0.3% 0.1% Gold 1677.65 5.05 0.3% 0.2% US Copper 374.05 -2.95 -0.8% 2.4% LME Copper 8245.00 -25.00 -0.3% 4.0% Dollar 79.731 0.243 0.3% 3.9%US corn 722.50 -6.50 -0.9% 3.5% US soybeans 1487.50 -8.00 -0.5% 4.8% US wheat 761.50 4.00 0.5% -2.1%US Coffee 142.10 -1.95 -1.4% -1.2% US Cocoa 2223.00 -23.00 -1.0% -0.6% US Sugar 18.19 -0.37 -2.0% -6.8%US silver 31.877 0.002 0.0% 5.5%US palladium 764.80 -0.65 -0.1% 8.7%