COMMODITIES-Up on grain rally; oil, copper off on stimulus worry

* Largest monthly gain in at least 4 years for soy, corn

* Oil, copper dip on worries of inadequate ECB, Fed action

* Natgas leads gains for the day on summer cooling demand

By Barani Krishnan

NEW YORK, July 30 (Reuters) - Grain markets extended their
blistering rally o n M onday as worries about crop damage from the
worst U.S. drought in a half century helped pull commodities
higher, despite a drop in oil and copper prices.

Chicago-traded soybean and corn futures rose
more than 2 percent, heading for their largest monthly gain in
at least four years.

Oil and copper prices fell up to half a percent as investors
outside of agricultural markets weighed the likelihood of
further stimulus measures later this week from the European
Central Bank and the U.S. Federal Reserve.

Grains aside, raw sugar futures in New York rose by about 1
percent as dry weather took its toll on crops in India, a key
sugar producing nation, amid weak monsoon rains.

The 19-commodity Thomson Reuters-Jefferies CRB index,
a global benchmark for the asset class, closed up for a fourth
straight day with a 1 percent gain.

Natural gas led the CRB's gains, with the market jumping 7
percent due to the hot U.S. summer that has spiked up demand for
air-conditioning. Soybeans and corn were the other big
gainers.

"Soybeans are shrinking before our eyes," said grains
analyst Rich Feltes of RJ O'Brien in Chicago. "Rains over the
weekend were less than expected and there are forecasts for dry
weather during the three most critical weeks for soybeans."

The drought in the crop-rich U.S. Midwest -- the worst since
1956 -- has fired up prices over the past six weeks, lifting
corn and soybeans to record highs. Wheat has rallied to the
highest level in four years, also aided by concerns over dry
weather in southern Europe.

Soybeans at the Chicago Board of Trade, which slipped
marginally last week on profit-taking after hitting a record
high $17.77-3/4 per bushel on Ju ly 20, were tracking their
biggest monthly gain in percentage terms since October 2006.

New-crop December corn futures have rallied 49
percent over the past six weeks, while November soybeans
have gained 20 percent. Benchmark September wheat has
surged 40 percent but remains under the 2008 high above $13 per
bushel.

Livestock and poultry producers hit hard by the price surge
have petitioned the federal Environmental Protection Agency to
waive a 2007 mandate essentially requiring more than a third of
the U.S. corn crop to be converted into ethanol.

STIMULUS MAY NOT BE ENOUGH

In oil, London-traded Brent crude ended down for the first
time in five sessions on worries that expected stimulus from the
United States and Europe may not be enough.

The lower close came despite a Reuters poll indicating a
drop in oil output by the world's largest producers of the
commodity.

Supply from the 12-member Organization of the Petroleum
Exporting Countries fell by 450,000 barrels per day (bpd) in
July to 31.18 million bpd, the Reuters survey showed, as Western
sanctions further cut supply from Iran and shipments declined
from Angola, Saudi Arabia and Libya.

"The bearish factor is liquidity," said Katherine Spector, a
commodity strategist at the Canadian Imperial Bank of Commerce
in New York. "Trading has been relatively slow and hedge funds
and other investors don't appear to want to commit in the
current economic environment."

Slowing growth in the United States, the world's top oil
consumer, has triggered expectations of stimulus measures from
the Federal Reserve, which meets on Tu esday and Wednesday.

European Central Bank President Mario Draghi also promised
last week to do what it takes to protect the euro, raising
expectations of new policy measures to solve the debt crisis
when the ECB meets on Thu rsday.

But analysts say markets may be hoping for too much.

"Speculation over central bank action looks like it has gone
too far," said Carsten Fritsch, an oil analyst at Commerzbank in
Frankfurt. "The euro has already begun to retreat and oil has
also started to weaken. The move upwards seems exaggerated."

Brent has risen more than 8 percent in July while U.S. crude
has gained around 6 percent, supported largely by hopes of more
economic stimulus.

In Monday's session, benchmark Brent crude settled
at $106.20 a barrel, edging down 27 cents.

U.S. crude's front-month contract closed at $89.78 a
barrel, falling 35 cents, also ending a four-day winning streak.

ECB NEEDS TO BE "MORE AGGRESSIVE"

London copper prices fell for the first time in five days,
also on worries that the ECB may fall short on its pledge to
save the euro zone come what may.

"People have got fed up with the thinking that rhetoric from
the ECB is enough," Standard Chartered analyst Dan Smith said.

"The ECB has to be more aggressive to turn things around.
Draghi talking about it was enough to give the market a lift but
that doesn't last very long. People want to see action rather
than words."

Three-month copper futures on the London Metal
Exchange (LME) shed $19 to end at $7,549 a tonne. The market is
poised to finish down more than 2 percent for July, shedding
over 13 percent from the year's high in February.

In New York, U.S. futures' most-active September contract
fell 0.3 percent to settle at $3.4160 per lb.

Prices at 5:34 p.m. EDT (2134 GMT)

LAST/ NET PCT YTD

CLOSE CHG CHG CHG
US crude 89.51 -0.35 -0.4% -9.4%
Brent crude 106.01 -0.46 -0.4% -1.3%
Natural gas 3.214 0.199 6.6% 7.5%

US gold 1620.70 1.50 0.1% 3.4%
Gold 1620.50 -2.34 -0.1% 3.6%
US Copper 341.60 -1.00 -0.3% -0.6%

Dollar 82.801 0.092 0.1% 3.3%
CRB 302.500 2.900 1.0% -0.9%

US corn 806.50 19.00 2.4% 24.7%
US soybeans 1643.50 41.75 2.6% 37.1%
US wheat 926.50 13.50 1.5% 41.9%

US Coffee 178.35 4.65 2.7% -21.8%
US Cocoa 2341.00 11.00 0.5% 11.0%
US Sugar 22.73 0.13 0.6% -2.2%

US silver 28.033 0.535 1.9% 0.4%
US platinum 1410.70 3.60 0.3% 0.4%
US palladium 588.35 16.50 2.9% -10.3%