March 20, 2012 / 1:32 AM / 5 years ago

Weak dollar drives broad rise; wheat dives

NEW YORK (Reuters) - Oil prices rose for a second straight session on Monday as a weak dollar provided an inflationary boost to a number of commodities. Wheat bucked the trend, tumbling on weather concerns.

Crude oil prices in New York rose as the dollar dropped against the euro for a third straight session <FRX/>. Brent crude in London ended little changed after an increase in Libyan oil exports and Saudi Arabian output countered continuing market support from tensions over Iran's nuclear program. <O/R>

Copper prices rose as an improved outlook in the United States, the world's largest economy, outweighed concerns about demand in top consumer China, where the property sector has cooled <MET/L>. Gold edged higher too, encouraged by signs that central banks had been buying the precious metal after last week's price drop. <GOL/>

The 19-commodity Thomson Reuters-Jefferies CRB index .CRB rose about half a percent. Cocoa and cotton provided the biggest boost, rising nearly 2 percent each. Wheat was the biggest drag on the CRB, falling nearly 3 percent.

(CRB graphic: link.reuters.com/ces27s )

U.S. crude oil settled up 1 percent in New York trading, finishing $1.03 higher at $108.09 a barrel. Aside from the weak dollar, oil was supported by concerns that a military strike on Iran's nuclear facilities would severely restrict supply.

"Iran as a supply risk is supporting prices and weaker demand, rising production and physical oversupply is weighing on prices, so it is keeping prices rather stable in this narrow range," said Carsten Fritsch, commodity analyst at Commerzbank in Frankfurt.

In copper, London's benchmark three-month copper futures closed up $60 at $8,570 a tonne.

Metals dealers attributed the market's rise to the highest reading for U.S. homebuilder sentiment since June 2007.

Since early this year, U.S. economic data has been pointing toward recovery, fueling hope the momentum will continue and compensate for slowing growth in China, the world's No. 2 economy. Latest data showed Chinese home prices fell in February from January, the fifth straight monthly decline, and were expected to keep heading lower.

New York benchmark cocoa futures for May delivery closed up nearly 1.5 percent, or $33, at $2,289 a tonne, recovering partly from Thursday's 4 percent tumble -- the biggest decline in six weeks.

"Cocoa is just digesting its late-week sell-off last week," said Nick Gentile, chief trading officer at Atlantic Capital Advisors, a commodity fund in Winston-Salem, North Carolina. "Any kind of bounce we get in the market, more or less, seems like short-covering."

U.S. wheat suffered its sharpest fall in more than two months after technical selling and wetter weather forecasts this week in the southern U.S. Plains winter wheat belt, which ought to boost crop development.

Wheat for May delivery settled down 2.9 percent, or 19-3/4 cents, at $6.52-1/4 a bushel in Chicago trade.

Soybean prices also fell, as profit-taking snapped a four-day rally powered by worries about lower output from drought-stricken soy growing areas in South America. May soybean futures in Chicago finished down about half a percent, or 7-1/2 cents, at $13.66-1/2 a bushel.

Prices at 3:25 p.m. EST (1925 GMT)

LAST/ NET PCT YTD

CLOSE CHG CHG CHG US crude 108.00 0.94 0.9% 9.3% Brent crude 125.58 -0.23 -0.2% 16.9% Natural gas 2.351 0.025 1.1% -21.3%

US gold 1667.30 11.50 0.7% 6.4% Gold 1662.26 8.77 0.5% 6.3% US Copper 390.90 3.10 0.8% 13.8%

Dollar .DXY 79.450 -0.337 -0.4% -0.9%

CRB .CRB 319.420 1.490 0.5% 4.6%

US corn 663.50 -9.50 -1.4% 2.6% US soybeans 1366.50 -7.50 -0.6% 14.0% US wheat 652.25 -19.75 -2.9% -0.1%

US Coffee 183.50 1.15 0.6% -19.6% US Cocoa 2289.00 33.00 1.5% 8.5% US Sugar 25.66 0.25 1.0% 10.5%

US silver 32.955 0.351 1.1% 18.1% US platinum 1684.70 9.20 0.5% 19.9% US palladium 707.60 5.90 0.8% 7.8%

Editing by David Gregorio

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