COMMODITIES-Soybeans at record high; oil up for 6th day

Thu Jul 19, 2012 12:36am BST

 * CRB index at 2-1/2 month highs on broad commodities rally
 * Soy at record high on fear it will wither next after corn
 * Syrian violence and Iranian tensions help oil

 (Updates with record high in soybeans)
 By Barani Krishnan
 NEW YORK, July 18 (Reuters) - Soybeans hit record highs on
Wednesday on fear that it will be the next to wither after corn
from the worst U.S. drought in 56 years, while oil markets
climbed for a sixth day on escalating violence in Syria and
tensions over Iran.
 Federal Reserve Chairman Ben Bernanke's testimony to
Congress that he did not expect the United States to lurch back
into recession also assured some investors that demand for oil
may not tumble even with the U.S. economy remaining sluggish.
 
 The Thomson Reuters-Jefferies CRB index, a benchmark
for commodities, rose 1.2 percent to touch a 2-1/2 month high
after 15 of its 19 components settled in positive territory.
 Natural gas led the CRB's gains as the market rose
more than 6 percent in response to the heat wave across America
that was boosting demand for cooling. Agricultural
markets from soybeans to corn and live cattle 
jumped about 2 percent or more.
 A surge in Wall Street stocks also aided industrial
commodities such as copper.
 "Equity markets turning solid is probably the best thing
that is working for the copper market," said Sterling Smith,
vice president of commodity research at Citibank's Institutional
Client Group in Chicago.
 U.S. soybeans rallied to all-time peaks on fear that the
hottest crop weather since 1956 -- which has devastated corn --
would decimate soybeans next.
 "It's soybeans' turn," Don Roose, grains analyst at U.S.
Commodities, said. "The next two weeks will be critical for
them."
 Soybean planters had been anticipating more moisture to
avert the kind of catastrophy that had affected corn. Drought in
South America has already devastated the soy crop in Brazil and
Argentina, the world's second and third largest exporters,
making it imperative that soy top harvester the United States
avoid further damage to yields.
 "So far it's been uh-oh, there's been no change in the
weather forecast. A huge shortage of soybeans is a real
possibility," Roose said.
 The spot soybean contract on the Chicago Board of Trade
 rose 2.7 percent to an all-time high of $16.85-1/2 a
bushel, surpassing the previous record of $16.79-1.2 set just
last week. New-crop November rose 2 percent to $16.48 
per bushel. 
 Soymeal futures rose 4 percent to close at an all-time high,
at $5.14 per ton, as feed supplies in the United States eroded
with the shrinking corn crop. Supplies of the alternative feed,
distillers' dried grain, have also tumbled with the slowing of
ethanol production on the back of high corn prices. 
 "The soymeal basis has gone up $7 (per ton) in a week," said
grains analyst Charlie Sernatinger at ABN Amro in Chicago. "And
the shorts are getting squeezed out of the August (contract)."
 U.S. corn rebounded from early profit-taking to extend its
biggest rally since 2008, climbing more than 1 percent to add to
a 50-percent summer rally triggered by the worst drought in 56
years that continues to shrink the crop. 
 CBOT spot September corn settled up 2 percent at
$7.95 a bushel after setting a new 13-month high at 7.97, close
to the record high of $7.99-3/4 set last summer.
 
 OIL MARKETS WATCH SYRIA, IRAN 
 Oil prices rose for a sixth straight session after news that
Syria's defense minister and President Bashar al-Assad's
brother-in-law and a top general were killed in a suicide bomb
attack. 
 The seriousness of tensions with Iran was highlighted when
U.S. Defense Secretary Leon Panetta said the United States will
hold Tehran directly responsible for any attempt to disrupt
shipping in the Gulf region and will be able to defeat any
Iranian attempt to shut down seaborne commerce. 
 U.S. crude oil's front-month contract settled up 0.7
percent, or 65 cents, at $89.80 a barrel.
 London's benchmark Brent crude closed up 1.1
percent, or $1.16, at $105.16 a barrel. 
 U.S. gasoline futures also rose by more than 1
percent after the government's weekly oil inventory report
showed gasoline stocks fell against expectations for a rise.
 
 Prices at 7:08 p.m. EDT (2308 GMT)      
                          LAST/      NET    PCT     YTD
                          CLOSE      CHG    CHG     CHG
 US crude                    89.90     0.03   0.0%   -9.0%
 Brent crude                  0.00     0.00   0.0% -100.0%
 Natural gas                 2.973    0.000   0.0%   -0.5%
 
 US gold                   1571.90   -18.70  -1.2%    0.3%
 Gold                      1572.59     0.62   0.0%    0.6%
 US Copper                  347.40     1.85   0.5%    1.1%
                           
 Dollar                      0.000    0.000   0.0% -100.0%
 CRB                       299.080    3.440   1.2%   -2.0%
 
 US corn                    783.25    11.50   1.5%   21.2%
 US soybeans               1620.00    29.50   1.9%   35.2%
 US wheat                   916.50    13.50   1.5%   40.4%
 
 US Coffee                  182.15     0.30   0.2%  -20.2%
 US Cocoa                  2204.00     9.00   0.4%    4.5%
 US Sugar                    23.06     0.10   0.4%   -0.7%
 
 US silver                  27.095   -0.221  -0.8%   -2.9%
 US platinum               1403.20   -16.50  -1.2%   -0.1%
 US palladium               577.55    -5.80  -1.0%  -12.0%
 
 (Editing by Phil Berlowitz and Diane Craft)