COMMODITIES-Broad gains as dollar tumbles; natgas, sugar spike
* Prices rise as dlr faces biggest loss vs euro in 2 months
* Falling U.S. gas inventories boost NY natgas futures
* Sugar rallies on hope for higher use in ethanol
NEW YORK, March 7 (Reuters) - Commodities rose broadly on Thursday, with metals and agricultural markets mostly posting strong gains after the dollar's tumble fueled buying in raw materials by holders of the euro and other major currencies. Falling U.S. gas inventories also boosted natural gas futures traded in New York while export demand for wheat and soybeans lifted prices for those contracts in Chicago . Sugar rallied on hopes for higher use of the sweetener in the biofuel ethanol. Oil prices were mixed, with U.S. crude futures rallying on the weaker dollar and benchmark Brent oil in London slipping on the restart of a North Sea pipeline that would boost supply. Copper and aluminium prices rebounded on the euro's rally against the dollar and better-than-expected U.S. data that boosted the outlook for growth. The dollar was down 1 percent against the euro by 2:45 p.m. ET (1845 GMT), on track for its sharpest slide in two months against the single European currency, after the European Central Bank left rates unchanged. The greenback also fell against a basket of major currencies although it rallied versus the yen. A weak dollar tends to make commodities cheaper and more attractive to holders of other currencies. The 19-commodity Thomson Reuters-Jefferies CRB index was up 0.8 percent, heading to its largest one-day gain in five weeks. Fourteen of the 19 markets tracked by the CRB showed gains.
NATGAS HITS 6-WEEK HIGH Natural gas led the CRB's gains, rising more than 3 percent and posting a six-week high after a government report showed a weekly inventory draw well above market expectations. The U.S. Energy Information Administration (EIA) report showed total domestic gas inventories fell last week by 146 billion cubic feet to 2.083 trillion cubic feet. Most traders viewed the decline as bullish for prices, noting it was the third straight week that the draw came in above expectations. A Reuters poll on Wednesday showed traders and analysts had forecast a 134 bcf drop. "The withdrawal was significantly more than expected, a bullish shock to the market. There were no reports of reclassifications and so this looks like a tightening of the background supply/demand balance for the period," Citi Futures energy analyst Tim Evans said in a report. The front-month gas futures contract on the New York Mercantile Exchange was up 9.7 cents, or 2.8 percent, at $3.567 per million British thermal units. It hit a six-week high of $3.603 right after the EIA data. Cold late-winter weather has helped push the front contract up about 14 percent in the last three weeks, turning the chart picture for gas more supportive after the market took out some key moving averages and trendline resistance.
SUGAR AT ONE-MONTH HIGH Raw sugar also rose more than 3 percent in New York, to a one-month high, joining the CRB's biggest gainers of the day. Dealers said a combination of rising diesel prices and an expected removal of taxes for ethanol in top producing Brazil fueled the sugar rally. Climbing diesel prices have increased the cost of getting sugar to port, and are expected to have an impact on the sugar/ethanol production split in Brazil, said a European sugar analyst. Any addition of sugar to ethanol production could help deplete a large global surplus of the sweetener, which has been pressuring prices to recent 2-1/2-year lows. "The question is what is the production mix going to be in Brazil in 2013/14," said the analyst. In 2012/13, nearly 50 percent of Brazil's center-south cane was directed into sugar production. But this could drop as low as 40 percent as ethanol becomes more attractive and the Brazilian government plans ethanol tax exemptions to help the country's sugar cane industry. The front-month contract for raw sugar in New York, May , gained 0.57 cent, or 3.1 percent, to 18.77 cents per lb. The contract has been recovering since falling below the 18-cent level last week.
Prices at 2:46 p.m. EST (1946 GMT)
LAST NET PCT YTD CHG CHG CHG US crude 91.45 1.02 1.1% -0.4% Brent crude 111.04 -0.02 0.0% -0.1% Natural gas 3.582 0.112 3.2% 6.9%US gold 1575.40 0.50 0.0% -6.0% Gold 1576.00 -7.31 -0.5% -5.9% US Copper 349.60 2.20 0.6% -4.3% LME Copper 7751.75 61.75 0.8% -2.3% Dollar 82.100 -0.363 -0.4% 6.9% CRB <.TRJCRB 0.000 0.000 0.0% -100.0%US corn 709.00 1.00 0.1% 1.5% US soybeans 1502.00 17.50 1.2% 5.9% US wheat 683.25 7.00 1.0% -12.2%US Coffee 143.15 1.90 1.4% -0.5% US Cocoa 2070.00 28.00 1.4% -7.4% US Sugar 18.77 0.57 3.1% -3.8%US silver 28.785 -0.018 -0.1% -4.8% US platinum 1594.00 14.20 0.9% 3.6% US palladium 756.60 16.55 2.2% 7.6%