CORRECTED-COMMODITIES-Cocoa, coffee rally; oil, metals little changed

Mon Jan 7, 2013 8:39pm GMT

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(Corrects headline to show oil little changed, not down)
    * Cocoa leaps from oversold levels, biggest rally in 3 weeks
    * Arabica coffee up before index rebalancing beginning Tues
    * Oil, copper end down slightly, gold edges higher
    * Eurozone investor sentiment offset by anxiety over US Fed
    * Speculation of thinner earnings on Wall Street also weigh

    By Barani Krishnan
    NEW YORK, Jan 7 (Reuters) - Cocoa and coffee prices surged
on Monday while most other commodities were little changed after
strong investor sentiment in the euro zone was offset by worries
that the U.S. Federal Reserve might limit its support for the
economy and markets.
    Speculation that U.S. corporate earnings for the end of 2012
would only be modestly better than in the previous quarter also
curbed demand in key industrial raw materials such as oil and
copper.
    Agricultural markets saw better demand.
    In New York, cocoa futures experienced their biggest one-day
jump in three weeks after hitting a technically oversold level,
while arabica coffee saw buying ahead of an index rebalancing
later this week.
    In Chicago, soybean futures rose on technical buying after
four straight losing sessions pushed prices to their lowest
level since mid-November last week. Corn and wheat also edged
higher from near six-month lows. 
    At the close, the Thomson Reuters-Jefferies CRB index
 was up 0.4 percent after 14 of the 19 markets on the
commodities bellwether ended in positive territory.
    
    COCOA BIGGEST GAINER OF THE DAY
    Cocoa was the largest gainer, rising 2.1 percent to end New
York futures trade up $47 at $2,267 a tonne. The rally
was spurred by technical buying after prices hit oversold
conditions on the 14-day relative strength index last week.
    In London trading, cocoa futures closed up 19
pounds, or 1.3 percent, at 1,451 pounds. The market dipped to
1,426 pounds earlier in the session, matching Friday's 8-1/2
month low for the benchmark second month contract.
    Cocoa was also boosted by expectations that the crop, mostly
grown in West Africa, might see tighter supply in coming months.
    This year, supply of the beverage and confection material
was expected to see "a small deficit, as West African production
falls and grindings recover," said Macquarie analyst Kona Haque.
    Dealers said cocoa grindings may also recover to some extent
after a weak 2012 performance, particularly in Europe.
Fourth-quarter European grind data, to be issued later this
month, is expected to show a year-on-year decline of up to 6
percent.
    
    ARABICA COFFEE ALSO JUMPS
    Arabica coffee rose on expectations of buying from an index
fund rebalancing due from Tuesday. A lack of producer selling
also helped coffee prices to recover from recent lows.
    Index funds rebalance their portfolios in early January, 
buying those commodities that have become underweight following
poor performances during the prior year. Arabica coffee was one
of the worst performing commodities in 2012, when it tumbled
nearly 37 percent.
    "Everyone's front-running the rebalancing in coffee," said
Nick Gentile, chief trader at Atlantic Capital Advisors in New
Jersey. 
    Arabica's benchmark contract in New York settled up
3.05 cents, or 2 percent, at $1.5040 per lb on ICE Futures U.S.
The contract touched a low of $1.4125 a week ago after a
prolonged downward slide driven by surplus supplies.
    "ICE arabica is expected to increase during Q1 as attention
turns to the Brazilian 2013/14 'off' season, starting in the
second half of the 2013 calendar year," said Andrea Thompson, an
analyst at Coffee Network, part of INTL FCStone. 
    Brazil, the world's biggest grower of coffee, has a biennial
crop cycle which causes output to rise, then fall, from one year
to the next with variations of up to 20 percent. A large
'on-year' crop in Brazil helped to propel world coffee
production to a record 149.5 million bags in 2012/13, well above
global consumption of 142.6 million, according to CoffeeNetwork.
    The U.S. Department of Agriculture has forecast a record 151
million bags. 
            
    OIL, METALS LITTLE CHANGED
    In oil markets, London's benchmark Brent crude settled up 9
cents at $111.40 a barrel. 
    Copper's three-month futures contract in London 
closed down 0.2 percent at $8,071 a tonne after falling almost 1
percent on Friday. 
    Oil and copper prices fell as investors remained depressed
by the possibility that the U.S. Federal Reserve might be
curtailing its highly stimulative monetary policy.
    The Fed's December policy meeting minutes, released on
Thursday, showed several officials of the central bank
considering a slowdown or stop of asset purchases that investors
have figured into their economic outlook. The Fed's balance
sheet of nearly $3 trillion risks instability with further
expansion, the officials had reasoned. 
    On the plus-side, data on Monday showed euro zone sentiment
improved for a fifth consecutive month in January to its highest
in almost two years after a successful Greek bond buyback and a
dip in Spanish jobless figures. 
    The spot price of gold was down 0.5 percent at around
$1,647 per ounce in late afternoon trade in New York. 
    
 Prices at 3:15 p.m. EST (2015 GMT)      
                             LAST/      NET    PCT
                             CLOSE      CHG    CHG
 US crude                    93.26     0.17   0.2%
 Brent crude                111.59     0.28   0.3%
 Natural gas                 3.266   -0.021  -0.6%
 
 
 US gold                   1646.30    -2.60  -0.2%
 Gold                      1647.40    -9.05  -0.5%
 US Copper                  367.80    -1.55  -0.4%
 LME Copper                8071.00   -14.00  -0.2%
 Dollar                     80.251   -0.248  -0.3%
 
 
 
 US corn                    685.50     5.25   0.8%
 US soybeans               1410.75    21.75   1.6%
 US wheat                   751.25     4.00   0.5%
 
 
 US Coffee                  150.40     3.05   2.1%
 US Cocoa                  2267.00    47.00   2.1%
 US Sugar                    18.86     0.01   0.1%
 
 
 US silver                  30.082    0.136   0.5%
 US platinum               1553.80    -1.40  -0.1%
 US palladium               670.00   -18.50  -2.7%
 
 (Editing by Nick Zieminski)
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