Crude oil up slightly as Egypt unrest continues
PERTH, Feb 10 (Reuters) - U.S. crude oil futures inched higher on Thursday amid ongoing concerns about unrest in Egypt, while a weaker dollar helped Brent rise above $102 a barrel.
Earlier, a government report showing high crude and oil product inventories in the U.S. world's largest consumer kept some pressure on WTI oil prices.
US group sets oil talks with China
WASHINGTON, Feb 9 (Reuters) - A group of prominent U.S. business executives and national security figures will visit China next month as part of their drive to reduce U.S. dependence on oilMembers of the private Energy Security Leadership Council will discuss possible U.S.-Chinese cooperation on oil security-related issues, said retired Navy Admiral Dennis Blair, a former U.S. director of national intelligence.
"Can't we work on them (oil security issues) together?" Blair said his fellow travelers would ask at meetings with Chinese government officials and business leaders. He cited what he called parallel U.S. and Chinese oil-market interests, including securing supplies at "a reasonable price."
OIL:Crude oil up slightly as Egypt unrest continues
PERTH, Feb 10 (Reuters) - U.S. crude oil futures inched higher on Thursday amid ongoing concerns about unrest in Egypt, while a weaker dollar helped Brent rise above $102 a barrel.
Earlier, a government report showing high crude and oil product inventories in the U.S. world's largest consumer kept some pressure on WTI oil prices.
COMMODITIES:Supply fears drive corn above $7; cotton to record
NEW YORK, Feb 9 (Reuters) - Agricultural markets blazed to a higher finish on Wednesday, with corn surpassing $7 the first time since 2008 and cotton hitting a 150-year top, on fear of tight supplies after the U.S. government cut crop estimates.
"They say a bull market needs to be fed, and we certainly got fed here today," Rich Nelson, an analyst at Allendale Inc in McHenry, Illinois, said, referring to government agricultural reports that served as catalyst to the rally.
GLOBAL MARKETS:Asian stocks, dollar subdued after cautious Fed
SYDNEY, Feb 10 (Reuters) - Shares in Asia's developed markets succumbed to a bit of profit taking on Thursday, while the dollar struggled after the head of the Federal Reserve signalled the U.S. economic recovery was still fragile and warned against sharp spending cuts.
"It's difficult for now for the euro to rise above the peak hit earlier this month. It will need a fresh factor to go beyond that peak," said Keiji Matsumoto, a strategist at Nikko Cordial Securities.
China Lifts Farm Subsidies (Source: CME)
China's government outlined farm subsidies and other support aimed at encouraging grain production as the country braces for the possibility of a weak wheat crop that could further exacerbate a global food-inflation scare. The State Council, China's highest administrative organ, issued a 10-point plan pledging small amounts of cash to irrigate wheat fields, plant wheat and corn, and treat crop disease, as well as a $180 million fund to buy equipment and more than $1 billion for drought-alleviation works. Beijing also said it would raise a symbolic minimum purchase price for rice by almost 40%. The bulletin, following days of warning from Chinese bureaus about drought over northern parts of the county, and a special wheat-production alert Tuesday from the Rome-based United Nations Food and Agriculture Organization, reflects growing anxiety around the world about food prices. As the measures are rooted in encouraging production, they may not have much effect in the short term.
The immediate risks were underscored by price gains on Wednesday of as much as 7% on wheat contracts traded in central China on the Zhengzhou Futures Exchange. Globally, wheat traders have bid prices higher in recent weeks on factors as disparate as protests in Egypt and snow in the midwestern U.S. A damaged Chinese crop would raise the likelihood that China would import more wheat, an uncomfortable proposition in Beijing where leaders in recent years have appeared to fail in efforts to achieve self-sufficiency in grain production. The effects of unexpected new demand from China for wheat would cause wide ripples, especially hitting the poor by driving up costs of flour for bread and noodles. China's rising demand for crude oil, which boosted crude prices, was a factor in encouraging cultivation of corn and sugar for biofuels, instead of food, that contributed to higher prices and food riots in 2008 from Bangladesh to Kenya. Social stability in China, too, always has depended on grain.
Much of the ritual in the ancient Chinese court revolved around ensuring a strong crop. During the 1950s and 1960s, exaggerated grain-production figures were published to please Mao Zedong. An ancient Chinese adage says, "Raise sons for old age, pile grain for times of famine." Yet, China's grain imports have expanded rapidly, undermining Beijing's long-running target of achieving 95% self-sufficiency in grains. China made its first sizable imports of U.S. corn in a decade during 2010 and in total bought 1.57 million metric tons on world markets, an 18-fold increase from 2009. Wheat imports expanded 36% in 2010 to 1.2 million tons, and China's rice imports grew 8.6% to 366,171 tons.
China To Spend Big To Combat Drought In North (Source: CME)
China has said it will spend nearly $1 billion to battle a drought plaguing huge areas of its north, as wheat prices continued their climb and the U.N. warned of serious consequences for the winter harvest. The drought is the worst in six decades in many areas, and has left a swathe of grain-producing regions reeling from a lack of any significant rainfall in more than three months. The government will spend at least CNY6 billion ($911 million) to divert water to affected areas, construct emergency wells and irrigation facilities, and take other measures, China's drought relief headquarters said. Wheat prices on the Zhengzhou commodity exchange in central China jumped nearly across the board on Wednesday, the exchange said. Prices of a key contract hit a "historic high" of CNY2,865 per ton on Tuesday, the Chinese finance website Hexun reported. The report didn't specify the contract to which the figure referred.
The spike in prices couldn't have come at a worse time for the government, which is struggling to cap soaring prices of food and other key goods. On Tuesday, the central bank announced the third interest rate hike in four months, one of a series of macro-economic levers it has pulled to tame inflation--which has a history of sparking unrest in China. The U.N.'s Food and Agriculture Organization, or FAO, warned in an alert issued Tuesday of the impact on the winter wheat crop, a key harvest for the world's biggest producer of the grain. "The ongoing drought is potentially a very serious problem," the Rome-based agency said. Eight major grain-producing provinces have been affected. The provinces together produce more than 80% of the country's winter wheat. The situation could worsen, the government has warned, with no significant rainfall expected in the near future.
The drought is the worst in 60 years in eastern China's Shandong province, the nation's second-biggest wheat producer, where rainfall in recent months has been 85% below normal.
U.S. wheat near 30-month top on growing supply concerns
SINGAPORE, Feb 9 (Reuters) - U.S. wheat futures rose half a percent building on previous session's 2 percent rally to hover near a thirty-month high as growing concern over production in China and the United States amid strong demand continued to buoy the market. "China is in danger for major crop loss if the dryness continues in the wheat areas," said Ker Chung Yang, commodities analyst at Singapore-based Phillip Futures, referring to the United Nations report.
Stocks slip after China hike; US yields higher
LONDON, Feb 9 (Reuters) - World stocks fell from this week's 29-month high as China's interest rate rise prompted investors to book profits, while general optimism over global growth sent 10-year U.S. bond yields to nine-month highs. "China is turning its focus towards inflation, rather than growth," said Adam Myers, senior currency strategist at Credit Agricole CIB. "What this means is that growth is likely to continue."
Fed officials see high bar for more bond buys
ANNISTON, Alabama, Feb 8 (Reuters) - Two top Federal Reserve officials said on Tuesday they expect the central bank's $600 billion bond purchase program to run its full course, while a third said the central bank should seriously consider scaling it back.All three suggested the Fed would face a high bar to increasing the program as the recovery gathers pace.
Dennis Lockhart, president of the Atlanta Fed, said based on his current forecast for moderate growth, more bond buying would not be needed after June, while Dallas Fed President Richard Fisher said he would likely dissent if further easing were on the table.
PRECIOUS-Gold holds near 3-week highs, China inflation eyed
LONDON, Feb 9 (Reuters) - Gold held near the previous session's near three-week high in Europe on Wednesday, supported by an increased focus on inflation after China's second interest rate hike in six weeks, and a slightly softer dollar.
Spot gold was bid at $1,363.23 an ounce at 0954 GMT, against $1,363.59 late in New York on Tuesday. U.S. gold futures for April delivery eased 10 cents to $1,364.00 an ounce.A change in sentiment towards the precious metal on Tuesday after it held its ground following China's rate hike prompted a scramble among speculative investors to cover short positions, lifting prices more than 1 percent.
FOREX-Dlr supported by rising yields, China hike absorbed
LONDON, Feb 9 (Reuters) - The dollar climbed against the yen and the Swiss franc on Wednesday, boosted by rising U.S. yields, while a sanguine reception from investors to China's latest rate rise helped the Australian dollar stay above parity.
Investors quickly regained composure after China delivered a 25 basis point rate hike late on Tuesday, the second such increase in little more than six weeks and on the final day of the Lunar New Year holidays.
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