Were the opening ceremonies for the Beijing games the beginning of the end of the commodities rally? This graphic shows that China’s economic growth took off after the International Olympic Committee gave it the nod in 2001. The commodities boom, based on the Reuters/Jefferies CRB Index, can be traced back to around that time as well.

China went on an unprecedented seven-year construction spree to modernize its cities and infrastructure before throngs of athletes, tourists and media members arrived from around the world, stockpiling raw materials to accomplish its makeover.

Building the Olympic facilities and spiffing up Beijing for the cameras was only a drop in the bucket compared to overall growth in China’s economy, but consider that the spectacular National Stadium, known as the Bird’s Nest, required 45,000 tonnes of steel. Over that time, China became the number one consumer of metals and the number two buyer of oil behind the United States.

No one is expecting China to slam on the brakes when the Olympics end. But even a cooling from 10 percent growth a year to 8 percent should have negative consequences for commodity prices, given that demand from the United States and Europe is withering.

    The biggest crop report of the summer will be released on Tuesday morning at 7:30 a.m. (1230 GMT). Undoubtedly it will be the main driver of Chicago Board of Trade grain and soybean prices that day and for the remainder of the week. 
    USDA’s August crop report is always a biggie. It’s the government’s first U.S. corn and soybean crop forecasts of the year based on actual field surveys, rather than historical average yield estimates. But this year offers some special twists. 
    Crop development for both is running one to three weeks behind normal in the heart of the Corn Belt. (Iowa and Illinois alone usually produce a third of both corn and soybeans.) Planting was delayed across the Midwest this year due to a wet, cold spring, followed in June by the worst flooding the region has seen in 15 years. So analysts are wondering if the government’s yield estimates will be a true reflection of the crop size.
    In a normal year, corn yield projections are more accurate than soybeans as corn goes through pollination during July. But as of last week almost a third of the U.S. corn crop had not yet pollinated. Still, crop scouts have an easier time predicting corn yields compared to soybeans, a crop which usually sees its key growth stage — flowering and pod-setting — in August, not July. So yield estimates for beans are always tough this early in the summer. 
    Then you have the issues tied to the great Midwest flood. 
    Since the deluge and weeks of levee breaks in June, grain analysts, traders and crop specialists have been second-guessing the USDA on how many acres of corn and soybeans were planted and how many were lost. The flooding occurred so late in the season that replanting corn or even beans looked like a losing proposition. Usually, corn planted after May 15 in the central Midwest loses about a bushel a day of yield due to fewer growing days.
    USDA promised that during July it would resurvey some 9,000 farmers in the heart of the Corn Belt that were hardest hit by the Midwest floods. In June, corn prices soared to a record above $8 a bushel on talk that as much as 5 million acres of corn were lost or would need replanting. Traders did back-of-the-envelope calculations using average yields of, say, 145 bu an acre and, presto, came up with a potential loss of 700 million bushels. That would have wiped out the projected end-stocks in September, 2009, already seen at 13-year lows before the flood.
    “We are so delayed on development that I don’t know if anybody is really going to be that confident on what USDA gives on yield. There’s just not enough to measure,” said Randy Mittelstaedt, analyst with Chicago-trade house R.J. O’Brien.  
    “What I’m hoping is we get a better soybean and corn acreage reflection. At least that will give us a starting point as we move forward the next three or four weeks and determine crop size and have a better handle on yield.” 
    Another detail traders will be looking at more closely will be the USDA’s assessment of this season’s carry-over soybean supplies. 
    Last month, USDA revealed a stunner buried away in its monthly domestic supply-demand report. USDA reported a ”-35 million bushel” supply of soybeans in its residual category for the 2007/08 crop year ending August 31. The first supply deficit for USDA’s catch-all category that most analysts could recall. USDA said the negative residual was based on demand through end-May and on USDA’s June 1 soybean stocks report.
    While it pointed to tighter supplies this season than even bulls expected, it could be an indication that the 2007 crop was understated — an adjustment that will not be made until September 30 when USDA issues its quarterly stocks report.
    Bottom line: stay close to news reports on Tuesday. No change in acreage, or an increase or decrease - all will have market implications for price. 
    Two well respected analysts, Rich Feltes of MF Global Research and Dan Basse of AgResource, will be commenting on the report from the CBOT floor after the USDA data on Tuesday and ahead of the 9:30 a.m. (1430 GMT) futures market opening. 
    Rest assured that after the opening, while the debate over USDA’s estimates will continue, the market will also focus closely on weather as pollination and pod-setting continue.  

Can’t decide who has the better energy plan, Barack Obama or John McCain? Now there’s a third choice — party girl Paris Hilton. The Hilton video riposte to McCain’s television attack ad comparing Obama to Hilton and Britney Spears is hilarious, not to mention kinda coherent and smart. (Read Reuters’ story about the video here)

Hilton’s tongue-in-cheek proposals actually sound as reasonable as the policy ideas of either of the actual candidates for President.

“We can do limited offshore drilling with strict environmental oversight while creating tax incentives to get Detroit making hybrid and electric cars,” Hilton proposed.

So, if the “wrinkly white haired guy” or the “elitist” aren’t your cup of Texas tea, try writing in a vote for the “hot” candidate … but prepare for an executive residence renamed the Pink House.

Following an acrimonious and drawn-out takeover battle for Hungary's MOL, Austrian oil and gas group OMV finally did as expected: it threw in the towel.

Yet according to OMV Chief Executive Wolfgang Ruttenstorfer, the consolidation pressures in central Europe -- the strategic rationale which prompted him to launch the unsolicited offer in the first place -- remain in place.

Analysts and investors have often pointed out that OMV could do better with the cash then parking it in a MOL stake. And while OMV sat tight and awaited the outcome of its unwanted approach, MOL busied itself stringing together a network of strategic allies, entering into ventures with Cez from the Czech Republic and Oman's OOC.

Meanwhile, Ruttenstorfer says he is determined to keep his 20.2 percent stake in MOL, at least for the time being -- but he did not rule out a sale in the mid or long-term.

With precious few takeover targets in the region in view, there is not much else Ruttenstorfer can do for now. 

For OMV, its MOL stake could be a lever to get,  for example, a share in MOL's refining business. 

Ruttenstorfer cited Lukoil's and Gazpromneft's interest in the region as one example for increasing consolidation pressures. Though any big investor would likely await the outcome of the European Union ruling on MOL's 10-percent voting cap, which poses a major obstacle to whoever would set their eyes on a takeover of  the Hungarian group. 

Once this issue has been cleared, OMV's stake in MOL could prove a valuable card in the consolidation game -- whether it would be in a match against one of eastern Europe's energy majors, or even  a retake of the battle between OMV and MOL.

(Reuters photo: OMV Chief Executive Wolfgang Ruttenstorfer)

Mining stocks have lost a third of their value over the past three months on fears the commodity super-cycle is coming to end -- but Xstrata's Mick Davis reckons it's still a good time to buy.

The acquisitive miner's $10 billion cash bid for Lonmin, the world's third-biggest platinum producer, is opportunistic and far from friendly.

But it has injected a badly needed buzz back into the sickly sector, lifting stocks across the board. And Lonmin investors are already betting on a sweetened offer.

Platinum traders, too, will be cheering Mick's move. Spot metal prices rose more than 3 percent as traders saw the bid as a vote of confidence for the future of the market.

Winning Lonmin would help Xstrata diversify its business from industrial metals such as copper. It might also help the Swiss-based group retain its independence in the dog-eat-dog mining sector. 

Five months ago, Xstrata escaped being bought when a takeover attempt by Brazil's Vale failed.

(Reuters photo:  Xstrata logo at the company's headquaters in Zug)  

The Commodity Futures Trading Commission has quietly bumped up the proportion of oil futures it thinks are held by speculators after going over its data. The agency now thinks speculators held 48 percent of oil futures and options -not 38 percent as it previously thought.

The CFTC is not providing much information about the revision, saying only it followed consultations with the futures industry.

The revision could be a little embarrassing for the agency as its position data forms a big part of its argument that oil speculators are not responsible for this year’s dramatic rally to a record over $147 a barrel last month.

Oil analysts noted the CFTC’s move was done rather quietly after a July 18 announcement. By contrast, the agency has trumpeted its recent enforcement actions in no fewer than six press releases this month.

The timing of the revision appears to coincide with the collapse of SemGroup LP, a midstream energy company that racked up $2.4 billion in losses on NYMEX futures and another $850 million in over-the-counter markets.

Oil traders think the huge losses incurred by SemGroup are a likely sign the firm was engaging in “hedgulation” -speculative bets based on its normal hedging activity.  One of SemGroup’s lenders said in a court filing last week that the company’s advisers had admitted that unauthorized speculative oil trading sank the company.

Commodity prices in general deflated during July as investors ran to the sidelines, taking profits. The Reuters-Jefferies CRB <.CRB> index of 19 commodity futures lost 10 percent — its steepest monthly drop in 28 years.

While declining crude oil prices led the drop in CRB and other commodity indexes, Chicago Board of Trade grain prices were not immune.  Weather worries usually keep corn and soybean prices on the boil in the hot days of July, as traders worry about heat stress and adequate moisture during pollination for corn plants, the key period determining yields. But not this year: corn weather in the Midwest has been ideal.

Corn, the most actively traded grain contract, fell 18 percent or more than $1 a bushel in July. Alongside that was a steady decline in open interest — down 7 percent during the month. Those two facts added up to big speculators cutting their bullish bets.

Factors beyond supply/demand pressured many commodities lower in July, including jitters among speculators about potential government moves to curb their participation in commodity markets given the clamor from consumers about rising food and fuel costs. But for both corn and  beans, the midsummer greenhouse-like conditions that have blanketed the U.S. Midwest Corn Belt have been the key bearish driver. Worries about flood losses from the June deluge in the heart of the Midwest seem a distant memory, although the market will get a solid reminder of the losses in the biggest USDA crop report of the year on August 12.

Meanwhile, optimism about solid corn pollination has grown. Analysts expect USDA on Monday afternoon to keep crop ratings near unchanged in its weekly crop updates. But crop watchers will next worry about the potential for an early frost that could damage corn and soybeans as the plants “finish” growth into September, filling out corn kernels and soybean pods. Both crops continue to run about 2 weeks behind  normal development due to late planting in the cool, raining spring planting period.

“The threat to this crop is it’s a late crop and there is the potential for cool air to become more established in Canada during the month of August and an early freeze in September for the U.S.”, said forecaster Mike Palmerino with DTN Meteorlogix.

Nationally, 59 percent of the corn crop was silking as of a week ago, meaning that the plants were pollinating. That compared to 81 percent for the average growth pace over the last 5 years. Looked at another way, more than 40 percent of the U.S. corn crop had not yet entered into the key yield stage.

Agronomists say another problem is that late-planted corn takes more time from silking to maturity than normal. This is because the accumulation of growing degree days (GDD, a common benchmark of heat and yield potential) per day decreases dramatically toward late summer and  into the early fall.

“These results do not bode well for late-planted corn that silks during the first or second week of August, because they suggest that physiological maturity of such late-silking corn may not occur until mid- to late-October where the risks of a killing fall freeze increase,”  said Bob Nielsen, extension agronomist at Purdue University in Indiana.

The heart of the Corn Belt typically sees its first killing freeze any time from late September in the north to mid to late October in the south.

States report growing degree days in their weekly crop updates alongside the seasonal average every Monday afternoon. This indicator will become closely watched during August to gauge maturity and the crop’s risk to freeze.

PHOTO: Corn fields pollinating near Plainfield, Illinois, on Sunday, August 3, thirty miles west of Chicago. Taken by Peter Bohan.

A dramatic last-minute hitch to plans for France's EDF to buy British Energy leaves managements, shareholders and especially the British government in a quandary.

It was a 12 billion pounds ($24 billion) deal that was supposed to relaunch Britain's nuclear energy programme. Everyone had been told to expect it. In fact, the collapse of talks came too late for French newspapers, several of which had been briefed on the deal and splashed it prominently on their front pages on Friday.

In end, however, big insitutional investors persuaded British Energy to reject EDF's offer as low-ball, despite the best endeavours of the British government, with a 35-percent stake. 

So what happens next? Talks are continuing and British business minister John Hutton says he remains convinced an EDF takeover makes sense; yet the gulf between the EDF and British Energy boards on price is clearly substantial. British Energy says there can be no certainty of any deal.

It is yet another headache to spoil Prime Minister Gordon Brown's summer holiday, as his popularity slumps to a record low .

(Reuters photo: A sign is seen on the security fence of British Energy's Heysham nuclear power station)