COMMODITIES-Grains head for prolonged rally; platinum up 7th day

Wed Jan 16, 2013 6:21pm EST

* Soy at 3-week high, corn hits 5-week peak before retracing
    * Platinum up for 7th straight day
    * Sugar dips on Brazil crop; cocoa down ahead of grind data

    By Barani Krishnan
    NEW YORK, Jan 16 (Reuters) - Fear of dry weather drove
soybean and corn prices to multi-week highs on Wednesday,
setting up what could be another prolonged rally in U.S.
agricultural markets after last summer's bumper run.
    Platinum extended gains too, running up for a seventh day
and deep into overbought territory.
    Most soft commodities fell, bucking the broadly higher
trend. Improving sugar crops in top producer Brazil prompted
farmers to sell, while cocoa dipped on expectations of bearish
grind data out of North America.
    The dollar was flat against a basket of major currencies
, holding little sway over commodities for a second
session in a row. 
    The 19-commodity Thomson Reuters-Jefferies CRB index
 settled slightly higher after the run-up in soybeans,
cotton crude oil and gasoline were offset
by losses in live cattle, cocoa, natural gas
, nickel and copper.
    
    DRY WEATHER UNDERPINS GRAINS    
    Soybeans rose by 1.7 percent on the Chicago Board of Trade,
closing up for the third time in four sessions, as dry weather
in South America and the United States stoked fears that the
slimmest grain stocks in six years could tighten further.
    "Let's face it, we need some rain," said Jack Scoville,
grains analyst at The Price Group in Chicago.
    CBOT soybeans for March settled up 23 cents at
$14.36-1/2 a bushel, after racing to $14.39 -- the highest price
since Dec. 26 for a front-month soy contract.
    The rally in soybeans propelled corn to a 5-week high.
Corn's benchmark contract on the CBOT rose 4.5 cents to
$7.35 a bushel before closing just 3/4 cent higher at $7.31-1/4
as a bearish report on ethanol pared gains.
    The U.S. Energy Information Administration pegged the
ethanol grind last week at 784,000 bushels per day, the lowest
level since the agency started releasing weekly data in June
2010. Corn is the feedstock for ethanol.
    Corn has rallied on the USDA's forecast for the tightest
global ending corn stocks since the 2006/07 marketing season.
    Front-month wheat settled up 2-1/4 cents at $7.82 per
bushel. The market expects the smallest global wheat supplies in
four years, and forecasts call for continued dry conditions in
the U.S. Plains states that grow most of the country's wheat. 
    "The dry weather is a worry in the U.S. Plains and in South
America, particularly Argentina, where delays to plantings could
have a negative impact on both corn and soybean production,"
said Rabobank analyst Erin FitzPatrick.
    Soybeans and wheat were the biggest gainers among
commodities in 2012, rising 18 percent or more, after the worst
U.S. drought in half a century wiped out a huge swathe of crops
during the summer. Inclement weather in major wheat exporters
from Russia to Argentina also created supply tensions. 
    
    SHORTAGE FEARS DRIVE PLATINUM
    Platinum rose for a seventh straight session, as hedge funds
bought aggressively, fearing tight supplies after a mine labor
crisis at the world's largest platinum producer in South Africa.
    The price of platinum stayed above that of gold for a second
straight day when Anglo American Platinum in South
Africa said it would shut two mines and cut 14,000 jobs. The
move is expected to widen the platinum market's deficit in 2013
in an already tight market due to strong autocatalyst demand. 
    Buying by momentum-driven hedge funds and money managers has
fueled platinum's 9 percent rally in the past seven sessions,
sending the market deeper into an overbought territory. The U.S.
EFTS Platinum Trust also posted an increase in its
platinum holdings so far in January.
    Spot platinum rose 0.4 percent to $1,685.52 an ounce
by 2:02 p.m. EST (1902 GMT), hovering near a three-month high of
$1,699.50 set on Tuesday.
    
 Prices at 6:01 p.m. EST (2301 GMT)      
                             LAST/      NET    PCT     YTD
                             CLOSE      CHG    CHG     CHG
 US crude                    94.15    -0.09  -0.1%    2.5%
 Brent crude                110.60     0.30   0.3%   -0.5%
 Natural gas                 3.435    0.000   0.0%    2.5%
 
 US gold                   1683.20    -0.70   0.0%    0.4%
 Gold                      1679.59     0.70   0.0%    0.3%
 US Copper                  360.65    -3.10  -0.9%   -1.3%
 LME Copper                7946.00   -48.00  -0.6%    0.2%
 Dollar                     79.809    0.030   0.0%    4.0%
                               
 
 US corn                    731.25     0.75   0.1%    4.7%
 US soybeans               1436.50    23.00   1.6%    1.3%
 US wheat                   785.00     2.25   0.3%    0.9%
 
 US Coffee                  153.00     0.50   0.3%    6.4%
 US Cocoa                  2256.00   -14.00  -0.6%    0.9%
 US Sugar                    18.45    -0.17  -0.9%   -5.4%
 
 US silver                  31.542    0.013   0.0%    4.4%
 US platinum               1692.20     4.20   0.2%   10.0%
 US palladium               726.45    13.10   1.8%    3.3%