Commodities: Strong US dollar weighs on WTI and metals, but wheat and cocoa strong

Commodities were lower across the board on Tuesday, as traders bid the US dollar higher ahead of the Federal Reserve's policy announcement due the next day, amid a cacophony of headlines related to the ongoing trade disputes around the world.

West Texas Intermediate was especially weak against that backdrop, retreating by 2.09% to $67.14 a barrel on the NYMEX, alongside a 2.29% fall in June 2018 gasoline futures to $2.1001 a gallon.

The pricier Greenback also took its toll on COMEX gold, with the June 2018 contract down by 0.90% to $1,307.30.

It was a similar story across base metals, with three-month LME copper finishing the session at $6,745 per metric tonne, versus a Monday close of $6,821.

To take note of, following weaker-than-expected readings on factory activity levels for April in the US and UK, markets' attention was set to turn to the release of the private sector-compiled Caixin China Purchasing Managers' Index on Wednesday morning.

Also weighing on certain base metals, overnight Washington extended its temporary reprieve for Canada, Mexico and the European Union from US tariffs on aluminium and steel.

Nevertheless, Brussels continued to push for a permanent exemption.

Thus, in response to the White House's announcement the European Commission issued a statement saying: "The US decision prolongs market uncertainty, which is already affecting business decisions. The EU should be fully and permanently exempted from these measures, as they cannot be justified on the grounds of national security."

That announcement came as the US Trade Representative Robert Lighthizer was set to travel to China during the same week for trade negotiations with Beijing.

In parallel, on Tuesday US Trade Secretary Wilbur Ross said negotiations with Canada and Mexico on NAFTA might not be concluded until fall due to the political calendar, among other considerations, specifically citing the upcoming elections in Mexico.

Agricultural commodities were strong however, with July wheat on CBoT again sporting significant gains and gaining 3.62% to $5.29 per bushel.

Similarly-dated cocoa futures on ICE were close behind, adding 2.44% to $2,894.00 per metric tonne.

June CME live cattle futures were the exception, retreating 0.35% to $1.0573 a pound.