20120830 0955 Global Commodities Related News.

Hurricane Isaac Offers Little Hope for Drought Relief (Bloomberg)
As Tropical Storm Isaac moves up the Mississippi River Valley with drenching rain, it will probably miss the drought-parched areas of the Midwest that need water most while ruining crops in other areas waiting for harvest. Flood warnings and watches reach across Louisiana, which may get up to 20 inches (51 centimeters) of rain, and through Arkansas, where as much as 5 inches may fall, according to the National Weather Service. After Isaac begins to break up, its remnants are expected to drift north into Missouri and then east across Illinois and Indiana. “It may put a dent in it, but it isn’t going to relieve” the drought, said Jeff Masters, co-founder of Weather Underground in Ann Arbor, Michigan. “It may knock them down one category.” Drought gripped 63.2 percent of the contiguous 48 states as of Aug. 21, according to the U.S. Drought Monitor in Lincoln, Nebraska. Of the four official categories of drought, the two worst covered 23.01 percent of the 48 states.
The dryness has left 38 percent of U.S. soybeans in poor or very poor condition, while 52 percent of corn was rated in the worst categories, the Department of Agriculture said. Terry Hayhurst, who farms in Vigo County, Indiana, 11 miles south of Terre Haute, spent most of this summer looking up at the sky, hoping for rain.

Farm Impact
Now that Isaac is predicted to bring soaking showers to his 1,200 acres of corn, soybeans and sorghum-sudangrass, Hayhurst said the rain will mostly just delay the harvest of corn and feed for his cows. “For the most part” the rain is coming too late, Hayhurst said in an interview. “But we’ll take moisture this year, however we can get it.” The soybeans, which he feared could be a total loss a month ago, could benefit from a deluge. “Of course, we don’t want to get 20 inches,” he said. For the rain to do the most good, it needs to fall slowly and over a few days, said David Miskus, a meteorologist with the U.S. Climate Prediction Center in Camp Springs, Maryland. If the rain falls hard and fast, most of it will run off and won’t be absorbed by the soil.

Help Needed
“It’s definitely too late to help corn, and I am not sure about soybeans, but we can definitely use the moisture no matter what,” said Miskus, also an author of the U.S. Drought Monitor, which will be updated tomorrow. “A slow, steady rain would be nice for several days.” The lack of rain across the Midwest has also caused the shipping channel in the Mississippi River to shrink to where less freight can be carried by barges on the nation’s largest waterway and its tributaries, including the Ohio River. More than 566 million tons of freight valued at $180 billion moved through inland waterways in 2010, including 60 percent of U.S. grain exports, 22 percent of domestic petroleum and 20 percent of the coal used to generate electricity, said the National Waterways Foundation in Arlington, Virginia. At 2 p.m. local time, Isaac was about 50 miles (80 kilometers) west-southwest of New Orleans with top winds of 70 miles per hour, 4 mph below hurricane strength.

Rain Lessens
As Isaac moves north, the amount of rain it brings will fall, said Dan Pydynowski, a meteorologist with AccuWeather Inc. in State College, Pennsylvania. When Isaac leaves Arkansas, it’s forecast to drop 1 to 2 inches in Springfield, Missouri. The heavy rain expected in Mississippi, Arkansas and Louisiana may be more hindrance than help to farmers, said Joel Widenor, co-founder of Commodity Weather Group LLC in Bethesda, Maryland. Beans, rice and cotton have yet to be harvested. The rain can hurt the quality of cotton and gusty winds can knock the bolls off the plant, he said. “If it actually falls off, it may just be a total loss,” Widenor said by telephone. The rain in Louisiana also won’t affect the Mississippi River because there aren’t any large tributaries in the area to capture the flow, said Jeff Graschel, a service coordination hydrologist at the Lower Mississippi River Forecast Center in Slidell, Louisiana. “All this rain that we are getting here falls into the Gulf of Mexico,” Graschel said.
Heavy rain draining into the Ohio River is needed to help shippers on the Mississippi. Graschel said that isn’t likely to happen. “It really does appear it will be a short-term situation and not helping us in the long term,” Graschel said.

U.S. farmers want new Farm Bill, but time is running out (Reuters)
Congress needs to pass a new Farm Bill and fast or risk putting U.S. farmers in financial jeopardy as they need to decide on how much winter wheat to plant and how much to spend on corn and soybean seeds, plus make other decisions critical to American food production, a number of farming experts said this week.

DTN Closing Grain Comments 08/29 14:41 (CME)
Hurricane Isaac Sparks Sharp Rally
The year from hell continues for grains as maturing crops decimated by the 2012 drought now have to worry about heavy rain and high winds from Hurricane Isaac. The entire grain complex closed sharply higher with wheat finding support from increased talk of a Russian export ban.

UK wheat harvest runs late as France, Germany wind down (Reuters)
The wheat harvest in Britain, the European Union's third largest producer, remains bogged down with heavy rains heightening quality concerns as activity winds down in the top two growers France and Germany.

GRAINS: U.S. wheat rose, gaining for the first time in six sessions, on concerns key producer Russia may curb exports of the drought-hit grain at an agricultural ministry meeting later this week. Soybeans extended gains into a second session on export demand from China and corn edged up as damage to crop yields in the U.S. Midwest from the worst drought in more than 50 years continued to underpin prices. (Reuters)

Pro Farmer: After the Bell Wheat Recap (CME)
Wheat futures extended gains at the start of open outcry trade and then ahead of noon CT and ended near session highs. Nearby futures at all three exchanged ended around 30 cents higher. Early support came on spillover from neighboring pits, but wheat was the upside price leader at times in the grain markets as traders remain concerned about global supplies.

Wheat Market Recap Report (CME)
December Wheat finished up 30 1/4 at 905 3/4, 2 1/2 off the high and 31 3/4 up from the low. March Wheat closed up 26 3/4 at 913 1/4. This was 27 1/4 up from the low and 3 1/4 off the high.
December Chicago wheat exploded higher today and posted a new 3 day high. Kansas City and Minneapolis wheat closed sharply higher as well. A number of new wheat export tenders mixed with a highly anticipated meeting between Russian agricultural officials on Friday has sent a new wave of buying into the wheat market. Tunisia bought 150,000 tonnes of option origin soft milling wheat this morning. Saudi Arabia announced a 550,000 tonne hard wheat tender that ends Friday. Finally, Syria announced a tender for 100,000 of soft milling wheat. Russian officials will meet Friday to discuss their domestic grain supply and their export outlook. Many traders believe Black Sea grain exports could slow in the coming months after drought deteriorated corn and wheat production. Good rainfall from Hurricane Isaac will help soil moisture levels for soft wheat planting in the Eastern Corn Belt and there is a chance for the rain to shift west, hitting Hard Wheat areas. The prospects of better rainfall for wheat planting offered little influence on today's price action. December Oats closed up 13 1/2 at 396. This was 14 up from the low and 3/4 off the high.

Pro Farmer: After the Bell Corn Recap (CME)
Corn futures surged 13 1/4 to 20 3/4 cents in the September through July contracts, while farther deferred months saw lighter gains. Futures ended high-range. Traders shifted their attention back to the stressed corn crop today. The generally weak condition of corn stalks this year means heavy rain and especially wind that is expected in areas of the Corn Belt could further deplete yield potential.

Corn Market Recap for 8/29/2012 (CME)
December Corn finished up 18 at 813 1/2, 1 off the high and 20 1/4 up from the low. March Corn closed up 16 1/2 at 813. This was 18 1/2 up from the low and 1 3/4 off the high. December corn traded sharply higher to end the day and saw good support from an explosive wheat market. Heavy rains and wind from Hurricane Isaac are expected to affect Arkansas, Mississippi, Alabama, Tennessee, Missouri, Illinois, and Indiana this week and harvest delays will be seen. The high wind could also have a negative impact on weak, harvest ready corn or shake ears to the ground. Temperatures are forecasted to reach highs over 95 in areas of Kansas, Nebraska, Iowa, and Illinois today. The high heat will be of no benefit to corn but should move harvest progress along. Ethanol production for the week ending August 24 averaged 819,000 barrels per day. This is down 0.49% vs. last week and down 7.8% from last year. Corn used in last week's production is estimated at 87.3 million bushels vs. 87.67 last week.
This crop year's cumulative corn used for ethanol production is 4.87 billion bushels and usage needs to average 148.4 million bushels per week to meet this crop year's USDA estimate of 5 billion bushels. Corn basis was steady to weaker in the central US has traders anticipate an increase in new crop grain movement in the next couple days. November Rice finished down 0.155 at 15.52, equal to the high and equal to the low.

Dust Bowl Kansas Farmers Set to Plant Winter Wheat: Commodities (Bloomberg)
Kansas farmers are preparing to plant winter wheat into the driest soil since 1991 after three seasons of drought causes Dust Bowl conditions in the biggest growing state and global reserves fall to a four-year low. About 97 percent of fields in the state had too little moisture as of Aug. 19, U.S. Department of Agriculture data show. Kansas is having its hottest year ever, leaving all 105 counties as federal disaster areas. The worst U.S. drought since 1956 spread to wheat-growing Great Plains states after damaging corn and soybean yields in the Midwest and driving prices for both crops to a record.
The International Grains Council cut its stockpile forecast for the third time in as many months Aug. 23, and the United Nations said in July that grain prices drove the biggest monthly gain in food costs since 2009. Wheat reached a four-year high in July, boosting costs for Panera Bread Co. and Grupo Bimbo (BIMBOA) SAB, and may jump another 8.2 percent to $9.80 a bushel in three months as droughts limit output from the U.S., Russia and Ukraine, according to Goldman Sachs Group Inc. “We just have no subsoil moisture at all,” said David LeRoy, a 56 year-old who farms 3,000 acres about 10 miles west of Great Bend, Kansas, and plans to start sowing winter wheat next month for harvesting in June. “We’re going to have to have a wet winter to raise any wheat at all. When you have a small amount of rain, like we have, nothing wants to grow.”

Global 2012/13 sugar surplus may halve from year ago-Datagro (Reuters)
Smaller sugar output from No. 2 producer India will likely cause the global surplus of the sweetener to roughly halve from last year to 3.07 million tonnes in the 2012/13 season, sugar and ethanol analyst Datagro said on Tuesday.

SOFTS: Raw sugar futures on ICE dipped in choppy early dealings after hitting an 11-week low in the prior session, with upside potential capped by steady harvest progress in top producer Brazil. ICE arabica coffee eased and cocoa firmed in light dealings, standing just below Tuesday's nine-month high, underpinned by concerns over patchy weather in top producer Ivory Coast. (Reuters)

Natural Gas Drops a Fifth Day as Isaac Makes Landfall (Bloomberg)
Natural gas futures in New York gained for the first time in five days, rebounding from a two- month low, on forecasts of hotter-than-normal weather in the Southeast that may boost demand for the power-plant fuel. Gas advanced as much as 1.2 percent. The weather may be hotter than normal in the southern U.S. and Great Lakes region Sept. 3 through Sept. 7, according to Commodity Weather Group LLC in Bethesda, Maryland. Hurricane Isaac was about 45 miles (75 kilometers) southwest of New Orleans at 12 p.m. local time, the National Hurricane Center said. “We have a bit of heat scheduled for the next 10 days, but September and October will be more moderate,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Traders may be covering short positions after prices fell to a two-month low.”
Natural gas for September delivery rose 2.3 cents, or 0.9 percent, to $2.637 per million British thermal units at 1:35 p.m. on the New York Mercantile Exchange. The futures have declined 12 percent this year. September gas expires today. The more actively traded October contract rose 5.1 cents, or 1.9 percent, to $2.684 per million Btu. October $2.25 puts, bets that prices will fall, were the most active gas options in electronic trading. They were down 0.7 cent to 3.1 cents on volume of 610 contracts at 1:41 p.m. Gas prices “could bounce off the weakness we have seen for the past few days,” said Brad Florer, a trader at Kottke Associates LLC in Louisville, Kentucky. The high in Dallas on Sept. 4 may be 99 degrees Fahrenheit (37 Celsius), 6 above normal, according to AccuWeather Inc. in State College, Pennsylvania. The high in Cleveland may be 84 degrees, 7 more than the usual reading.

COLUMN-Asian refiners should thank China for low run rates
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
LAUNCESTON, Australia, Aug 29 (Reuters) - If there's one group of people happy at China's slowing economic growth it's likely to be refiners in Asia, who continue to benefit from strong margins as Chinese competitors limit fuel exports.
The profit from making gasoil, or diesel, in Asia rose to the highest in 14 months on Tuesday as global supplies tightened with the shutdown of units in the U.S. Gulf ahead of Hurricane Isaac and a fire at Venezuela's biggest refinery.

OIL-Oil falls below $112 as Isaac misses oil platforms
LONDON, Aug 29 (Reuters) - Brent crude oil slipped below $112 per barrel as Hurricane Isaac, which hit land in Louisiana, left U.S. Gulf Coast oil production facilities without significant damage.
"It is expected that oil production in the Gulf of Mexico will quickly return to normal," said Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt. "What is more, inventory data from the United States were disappointing."

Oil Declines for a Second Day as Stockpiles Rise, Storm Weakens (Bloomberg)
Oil dropped for a second day in New York after stockpiles unexpectedly rose and Hurricane Isaac weakened after making landfall, reducing the threat to offshore platforms and rigs in the Gulf of Mexico. Futures slipped as much as 0.4 percent after falling 0.9 percent yesterday. Crude inventories increased 3.8 million barrels last week, data from the Energy Department showed. They were forecast to decrease 1.75 million barrels, according to a Bloomberg News survey. Isaac was downgraded to a tropical storm after striking the Louisiana coast as a hurricane. Oil for October delivery slid as much as 34 cents to $95.15 a barrel in electronic trading on the New York Mercantile Exchange and was at $95.24 at 9:06 a.m. Sydney time. The contract yesterday dropped 84 cents to $95.49, the lowest close since Aug. 27. Prices are 8.2 percent higher this month and 3.6 percent lower this year.
Brent oil for October settlement fell 4 cents to $112.54 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark grade’s premium to West Texas Intermediate closed at $17.05. Companies halted about 95 percent of oil production in the Gulf and 72 percent of natural-gas output, the Bureau of Safety and Environmental Enforcement said. Six Louisiana refineries were shut and three were operating at reduced rates, idling at least 6.7 percent of U.S. capacity, according to data compiled by Bloomberg. Isaac will linger with heavy wind-driven rain for two days, according to the National Hurricane Center. It was 35 miles (56 kilometers) south of Baton Rouge with top winds of 70 miles per hour, down from 80 mph at landfall, and moving northwest at 6 mph, according to an NHC advisory at 4 p.m. local time yesterday.

US Gulf oil industry largely shut down as Isaac nears
HOUSTON, Aug 28 (Reuters) - U.S. Gulf of Mexico oil production dropped by more than 90 percent and coastal refineries shut down on Tuesday as Hurricane Isaac approached the Louisiana coastline.
Government figures showed offshore oil output down by 1.3 million barrels per day from normal levels. Offshore gulf natural gas output was curtailed by two-thirds, and refinery and port closures added to the storm-related supply disruptions.

Hurricane Isaac zeroes in on fortified New Orleans
NEW ORLEANS, Aug 28 (Reuters) - Hurricane Isaac surged ashore in southern Louisiana on Tuesday, packing high winds and heavy rains, and was set to hit New Orleans seven years to the day after Hurricane Katrina devastated the city.
Isaac is the first hurricane to make landfall in the United States this season. While not packing nearly the power of Katrina -- which was a Category 3 storm when it slammed the Crescent City on Aug. 29, 2005 -- Category 1 Isaac was nevertheless a powerful reminder of New Orleans' vulnerability.

G7 urges higher oil output, warns on reserves
WASHINGTON, Aug 28 (Reuters) - Finance ministers of the Group of Seven most industrialized nations urged oil-producing countries on Tuesday to raise output to ensure the market is well supplied, while warning that the West was ready to tap strategic oil reserves to offset rising prices that could hamper global growth.
"We stand ready to call upon the International Energy Agency to take appropriate action to ensure that the market is fully and timely supplied," the G7 said in a statement. "The current rise in oil prices reflects geopolitical concerns and certain supply disruptions. We encourage oil-producing countries to increase their output to meet demand."

White House: tapping oil reserves still an option
ON BOARD AIR FORCE ONE, Aug 28 (Reuters) - The White House said on Tuesday that tapping strategic oil reserves remained an option but it had nothing to announce on the subject despite concerns about supply disruptions resulting from Hurricane Isaac.
"That option has been on the table for some time, and remains on the table, but we have no announcements to make today," White House spokesman Jay Carney told reporters traveling to Iowa with President Barack Obama.

IEA: Iran outage, high price don't justify oil release
STAVANGER, Norway, Aug 28 (Reuters) - The head of the International Energy Agency on Tuesday voiced her strongest opposition yet to a release of emergency oil stocks, risking a rift with the IEA's most influential member, the United States, over strategic reserves policy.
Maria van der Hoeven, the Dutch executive director of the agency that represents 28 energy importing countries, said higher oil prices alone did not justify a release and world oil markets could cope with the loss of Iranian exports, hit hard by U.S. and European sanctions against Tehran.

Russia cuts gas export volume, price f'cast-govt source
MOSCOW, Aug 29 (Reuters) - The Russian Economy Ministry cut its 2012 gas export forecast to 193 billion cubic metres (bcm) from an earlier 212 bcm due to sluggish European demand, which also prompted it to reduce its average export price estimate, a government source told Reuters.
The the export price to countries outside the former Soviet Union was expected to fall to $393 per 1,000 cubic metres this year from an earlier projected $439. State-controlled Gazprom  has a monopoly on Russian gas exports.