GRAPHIC-Did Aussie dollar fall spark commodities sell-off?

Australia's floods may have helped trip up commodities, which saw their steepest losses in almost two months on Tuesday after the currency down under dropped by about 1.1 percent.

Analysts said the floods affecting vast areas of Queensland, the coking coal capital of the nation and a major grain, cotton and sugar growing area, may have been the trigger for the liquidation of those positions.

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"It looks like the Aussie dollar fall led this. Things have been on a charge for a long while. A lot of systematic hedge funds are trading on a dollar correlation basis," said Brenton Saunders of Taurus Funds Management.

The Reuters-Jefferies CRB index dropped 1.6 percent in its sharpest one-day fall since mid-November after investors and traders worldwide returned to work from holidays to find many markets had run up to their highest in two years or more.

Australia's record floods are causing catastrophic damage to infrastructure in the state of Queensland and have forced 75 percent of its coal mines, which fuel Asia's steel mills, to grind to a halt, Queensland's premier said on Wednesday.

"We wish not to be misunderstood so we shall be very, very clear: the circumstances that are prevailing in the floods in Queensland, Australia are huge and shall have a very real and very important and very serious impact upon the Australian economy and upon the Australian dollar," said Dennis Gartman, publisher of the Gartman Letter.

"Australia is an exporter of goods. most notably coal and grains. It is the world's largest exporter of coal, and it can be and has been from time to time the world's largest exporter of wheat. Both 'industries' are being seriously. very, very seriously. hurt by the 'Old Testament'-like floods that have befallen nearly all of Queensland."

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