Oil prices fell on Wednesday, a day after posting their biggest gains since December, after worries about creeping U.S. crude stockpiles, and grains markets slumped as heavy snows relieved dryness in America's crop belt. Prices of base metals such as copper and zinc slipped as the dollar hit a one-week high against the euro. A stronger dollar technically makes commodities priced in the greenback costlier for holders of other currencies.
Precious metals bucked the lower trend, with gold and silver rising on bargain hunting by investors after last week's losses. Gold particularly rose on news of another bullion purchase by South Korea's central bank in February, and on hopes that the outflow from gold-backed exchange-traded funds will end soon.
The Thomson Reuters-Jefferies CRB index, a global benchmark for commodity prices, settled down 0.6 percent after falling to its lowest levels since July 12.
Fifteen of the 19 markets tracked by the CRB ended lower. Corn and wheat fell the most, by about 3 percent each.
RISING US INVENTORIES PRESSURE OIL
Oil prices fell more than $1 per barrel after U.S. government data showed domestic crude inventories rose much more than forecast.
U.S. crude stocks rose 3.83 million barrels in the week to March 1, the Energy Information Administration (EIA) said in its weekly report. Analysts had forecast a 500,000-barrel build for last week in the United States, the world's largest oil consumer.
The rise in U.S. crude stockpiles came as refinery utilization fell during winter plant maintenance season and as the country's oil imports dropped last week.
"This is all definitely putting some pressure on (crude oil) in the short term," said Phil Flynn of Price Futures Group in Chicago. "The crude market hasn't bottomed yet."
U.S. crude settled down 39 cents, or 0.4 percent, at $90.43 per barrel.
Benchmark Brent crude, traded in London, finished down 55 cents, or 0.5 percent, at $11.06.
WET WEATHER WEIGHS ON WHEAT, CORN
U.S. wheat futures sank to their lowest level in more than eight months as heavy snows eased dryness in key growing areas and boosted harvest estimates.
Optimism soared after a storm dumped 5 to 10 inches of wet snow on the Midwest on Tuesday, the latest round of precipitation following the worst U.S. drought in more than 50 years. Additional moisture is expected to provide more relief to bone-dry soils later this week.
"Up until a month ago, the ability to produce wheat this coming spring was in doubt to put it mildly," said Jack Scoville, vice president of Price Futures Group. "All of a sudden that situation's changed."
Chicago-traded wheat for May delivery tumbled 22-1/2 cents, or 3.2 percent, at $6.83-3/4 a bushel.
The U.S. hard red winter wheat crop, which is used to make bread, had been stressed by dryness in the Great Plains since it was planted last fall. However, crop forecaster Lanworth raised its forecast for U.S. wheat production 6 percent due to increased precipitation in the southern and central Plains.
Global wheat output also could climb to record highs in the coming year due to improved crop prospects for key producers that were hit by severe droughts last year, said Joe Glauber, chief economist for the U.S. Department of Agriculture.
"This is an encouraging sign to have a couple of major snow storms, and it looks like slow melting snow, which is another positive, but we will see," he told Reuters.
Improving moisture weighed on corn prices ahead of the U.S. spring planting season.
Chicago-traded corn for May slid 20-1/2 cents, or 2.9 percent, to $6.88-1/2 a bushel.
Corn for December, representing the crop to be harvested in fall, ended down 1.4 percent at $5.44-1/2 after dropping to a near nine-month low.