U.S. Commodities: Oil Rises as Israel, Mideast Concerns Mount

Crude oil rose after Israeli Foreign Minister Avigdor Lieberman said two Iranian gunboats are planning to move through the Suez Canal to Syria, spurring concern that Middle Eastern petroleum shipments will be disrupted.

Lieberman called the move he expects later today a “provocation.” The possible action by Iran comes five days after Egyptian President Hosni Mubarak stepped down. Brent crude, the European benchmark that is more sensitive to Middle East unrest, settled at the highest level since Sept. 25, 2008.

“This is the latest addition to the Middle East risk premium,” said Phil Flynn, a vice president of research at PFGBest in Chicago. “This is a knee-jerk reaction to the headlines.”

In other markets, cotton climbed to a record on signs that demand continued to increase in China, the world’s largest importer, as flooding hurt crops in Australia. Rice tumbled. The UBS Bloomberg Constant Maturity Commodity Index advanced 0.3 percent to 1,705.79.

Oil futures for March delivery rose 67 cents, or 0.8 percent, to $84.99 a barrel on the New York Mercantile Exchange.

Brent for April settlement jumped $2.14, or 2.1 percent, to $103.78 a barrel on ICE FuturesEurope.

Cotton

Cotton futures for May delivery rose by the exchange limit of 7 cents, or 3.7 percent, to a record $1.9493 a pound on ICE Futures U.S. in New York. The price, up 16 percent this month, has more than doubled in the past year.

China’s textile mills increased yarn output by 14 percent to 27 million metric tons last year, a government commission said last month.

Australia, the fourth-largest exporter, will harvest 6.2 percent less than a December estimate, a government agency said yesterday.

“Strong buying and limited supplies is a very good combination to push prices higher,” said Gary Raines, an economist at FCStone Fibers & Textiles in Nashville, Tennessee.

China imported 2.84 million tons last year, the most since 2006, according to customs figures.

Rice

Rice futures tumbled the most in eight months on speculation that a decline in U.S. planting will be less than analysts forecast.

Farmers may sow 3.3 million acres when planting begins in April, down 9.4 percent from a year earlier, the U.S. Department of Agriculture said on Feb. 11. Analysts anticipated a decline of 25 percent as farmers switch to more-profitable corn, soybeans and cotton, according to a Bloomberg News survey late last month.

The government estimate was “not what the market was expecting at all, and not what any of us believe will happen,” said Dennis DeLaughter, the owner of Progressive Farm Marketing Inc. in Edna, Texas. “The USDA is not even close to being right.”

Rice futures for March delivery fell 55.5 cents, or 3.6 percent, to $14.675 per 100 pounds on theChicago Board of Trade, the biggest drop since June 2. The most-active contract has slumped 9.9 percent since Feb. 9.

Commodities settled as follows:

Precious metals: April gold up $1 to $1,375.10 an ounce March silver down 6.7 cents to $30.629 an ounce April platinum up $2.70 to $1,834.30 an ounce March palladium down $1.55 to $838.35 an ounce

Livestock: April live cattle up 0.4 cent to $1.14175 a pound March feeder cattle up 1.95 cents to $1.30475 a pound April lean hogs down 0.65 cent to 91.9 cents a pound February pork bellies up 2 cents to $1.21 a pound

Grains: May soybeans down 2.75 cents to $13.785 a bushel May corn unchanged at $7.01 a bushel May wheat down 2.75 cents to $8.695 a bushel May oats down 1 cents to $4.12 a bushel

Food and Fiber: May coffee up 0.5 cent to $2.616 a pound May cocoa up $53 to $3,421 a metric ton May cotton up 7 cents to $1.9493 a pound May sugar up 1.01 cents to 29.22 cents a pound May orange juice up 4.85 cents to $1.7115 a pound

Energy: March crude oil up 67 cents to $84.99 a barrel March natural gas down 5.5 cents to $3.921 per million British thermal units March heating oil up 4.58 cents to $2.7748 a gallon March gasoline up 5.59 cents to $2.5447 a gallon

Others: May copper down 6.35 cents to $4.4825 a pound May lumber down $4 to $328.50 per 1,000 board feet.

(Source: http://www.bloomberg.com/news/2011-02-16/u-s-commodities-oil-rises-as-israel-mideast-concerns-mount.html)