Commodities end volatile week down on Europe worries

Commodities slid on Friday, ending a volatile week where oil and grains initially surged on supply concerns and a weak dollar, before tumbling on the currency's rebound and renewed worries over Europe. Corn, wheat and soybean futures extended losses after Thursday's selloff, which was triggered by bigger-than-expected supply estimates from the US government.
US commodity markets will be closed on Monday in observance of Martin Luther King Jr. Day. Fears of a wide-ranging euro zone downgrade by Standard & Poors - confirmed by the credit rating agency after most commodities had settled for the day - pressured oil and metals prices through the day.
S&P downgraded the credit ratings of nine euro zone countries, stripping France and Austria of their coveted triple-A status but not EU paymaster Germany, in a Black Friday 13th for the troubled single currency area. "While it should be anticlimatic, the realisation will also be sobering. In particular, the flight to the dollar will be accelerated, pushing crude oil prices lower," said John Kilduff, partner at Again Capital LLC in New York. Oil prices fell in choppy trading as the bleak sentiment on Europe countered the supportive effect of potential supply disruptions in Nigeria and Iranian threats to shipping.
Copper and gold also fell, pushing the 19-commodity Thomson Reuters CRB index down 0.7 percent on the day. For the week, the CRB declined 0.6 percent, as the slide in prices over the last three sessions was almost offset by gains in the first two days of the week.
"The dollar seems to be the main go-to safe-haven play at the moment," said David Meger, director of metals trading at futures brokerage Vision Financial Markets. The dollar - whose strength is a negative to commodities - hit a near 17-month high against the euro.
US crude oil fell 40 cents, or 0.4 percent, to settle at $98.70 a barrel. For the week, it was down 2.7 percent. London's Brent crude closed down 82 cents, or 0.7 percent, at $110.44 a barrel. For the week, it lost 2 percent. Grains markets on the Chicago Board of Trade extended their losses from Thursday after a forecast for more crop-boosting rain on South American production areas.
Corn, wheat and soybean prices had mostly rallied over the past month on worries that a drought in Brazil and Argentina would decimate the global supply of grains. Weather forecasts on Friday, however, suggested a wetter trend in South America over the next two weeks.
"The (midday) run of the American model came in wetter in the six- to 10-day period for almost all of Argentina and southern Brazil. A lot of those areas are being watched closely because of the moisture deficit," said Joel Widenor if Commodity Weather Group, LLC. "We're still holding on to our forecast of more limited precipitation in the six to 10 day, but the fact that the model trended wetter got some folks thinking the rain might be coming in a little quicker," he said.
CBOT corn ended down 12 cents, or 2 percent, at $5.99-1/2 per bushel. For the week, it fell around 7 percent. Wheat fell about half a percent on the day and about 4 percent on the week. Soybeans closed down 1.6 percent for the session and about 1 percent lower for the week.