By Luzi Ann Javier Feb. 19 (Bloomberg) -- Commodities declined as the Federal Reserve Board’s decision to raise the discount rate for the first time in more than three years boosted the dollar, weakening the appeal of U.S. currency-denominated investments. Copper futures fell as much as 2.1 percent on the London Metal Exchange, leading a slump in industrial metals, as the dollar climbed to a nine-month high against the euro. Gold and other precious metals dropped, while grains and oilseeds slumped. The S&P GSCI Index of 24 commodities lost 1 percent, the first drop this week. “The rising dollar continues to keep investors away” from commodities, said Hwang Il Doo, a senior trader with KEB Futures Co. in Seoul. The dollar rose to $1.3470 per euro as of 4:39 p.m. Singapore time, after earlier climbing to $1.3444, the strongest since May 18. The Fed sent its most explicit signal yet that the emergency supply of liquidity to financial markets is done and the most aggressive monetary policy easing in its 96-year history will eventually reverse. The Fed’s decision aided the dollar, hurting commodities priced in the U.S. currency. Gold and oil also declined. “We’ve already seen China putting the brakes on and now the U.S. is doing the same,” said Mark Pervan, senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. Copper in London fell as much as $150 to $7,115 a metric ton and traded at $7,148.25 a ton at 4:42 p.m. Singapore time, trimming this week’s gain to 5 percent. The metal gained 1.9 percent yesterday after earlier touching $7,336, the highest level since Jan. 27. Dollar Dependent “The copper price is totally dependent on the strength, or lack thereof, in the dollar,” said Mark Lewon, vice president for operations at Utah Metal Works Inc. in Salt Lake City, Utah. Gold for immediate delivery fell as much as 0.8 percent to $1,099.41 an ounce before trading little changed at $1,109.10. Soybeans for May delivery lost as much as 1.7 percent to $9.41 a bushel after Argentina said yesterday it may exceed a forecast for a record harvest of 52 million tons as rains aid crops. Futures are headed for a 0.7 percent decline this week. Rice for May delivery lost 0.6 percent to $13.56 per 100 pounds in Chicago, set for a 4.9 percent decline this week. The Philippines, the world’s biggest rice importer, will allow private companies and cooperatives to import 200,000 tons at state-subsidized tariffs, taking the nation’s purchases to a record 2.45 million tons, Romeo Jimenez, National Food Authority marketing director, said today. Commodities measured by the Reuters/Jefferies CRB Index have lost 2.6 percent this year after a 23 percent jump in 2009. Sector funds recorded a seventh week of outflows in mid-February as China’s tightening of bank reserve requirements, a strong dollar and healthy stockpiles of some commodities cut demand, according to EPFR Global. Outflows this year are now the largest among the nine major sector fund groups tracked weekly by the research company, EPFR said in a statement. --With assistance from Kyoungwha Kim in Singapore and Jae Hur in Tokyo. Editors: Matthew Oakley, Dan Weeks To contact the reporter on this story: Luzi Ann Javier in Singapore at +65-6212-1304 or ljavier@bloomberg.net To contact the editor responsible for this story: Wendy Pugh at +61-3-9228-8736 or wpugh@bloomberg.net

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