Saturday 17 July 2010

Weekend Update – July 17, 2010

Baltic Dry Index. 1720 +20 (Down 59% since May 26, 2010.)
LIR Gold Target by 2019: $3,000.

"I like pigs. Dogs look up to us. Cats look down on us. Pigs treat us as equals."

Winston Churchill.

This weekend we take the opportunity to cover the under reported weather related crop impact across Eur-Asia, from drought and flooding. This year, Eur-Asia’s weather pattern has been disrupted on a massive scale. The biggest impact is likely to be with wheat, since Russia, the Ukraine and Kazakhstan are all large producers and exporters of wheat, but from the EU all the way across to China this year’s growing conditions has been a story of not enough rain, much of the EU, Russia, Kazakhstan, northern China, to way too much rain, parts of the EU, the Ukraine, southern China. Yesterday we covered the prospects for a rice crop failure in the Mekong delta of Vietnam, the second largest exporter of rice. Today we cover the very ugly picture that’s developed in wheat production. Completely off the radar for most people, diverted by World Cup football, the arriving age of austerity, BP’s Gulf of Mexico tragedy, and the political football of Libya now intruding into the US mid-term elections, a bad crop year in Eur-Asia has the potential to become the year’s biggest story of all. It now all depends just how bad “bad” becomes.

We open with an already rain soaked southern China getting hit with typhoon Conson. This story has the potential to become the disaster story of the next week, especially as BP does now finally seem to have brought their Macondo oil well under control. If really so, BP’s team can now proceed with deliberation and caution in attempting the final phase of a permanent fix via the first relief well. In southern China, it’s now all down to how much more rain falls in the next few days.

146 dead in China rainstorms and floods: state media

(AFP) – 13 hours ago

BEIJING — Torrential rain and severe flooding have left at least 146 people dead and 40 missing in ten Chinese provinces, mostly along the Yangtze River following recent storms, state media said Friday.

The Xinhua news agency said that as of 4:00pm (0800 GMT) Friday, rain-triggered floods had affected some 38.2 million people and 1.3 million had been evacuated.

The latest toll is near 40 percent increase on that reported by Xinhua Tuesday following rains along the Yangtze River, China's longest, over the past 10 days.

Heavy downpours in central and eastern China have caused water levels in major lakes and some river tributaries to rise alarmingly, state media has said.

A lead and zinc mine in eastern China caved in due to heavy rain and was threatening to contaminate a popular lake on Friday, Xinhua said.

A river feeding Zhejiang's Qiandao Lake -- one of the province's major tourist attractions -- has turned grey after slag from the collapsed mine leaked out, the report said.

Authorities are also bracing for damage caused by Typhoon Conson, which killed 39 people and left 84 missing in the Philippines.

It made landfall on Hainan island off southern China late Friday, packing winds of up to 126 kilometres an hour (78 miles an hour), Xinhua said, quoting the disaster prevention office of Sanya, a tourist resort.

-----The typhoon is expected to hover in the island for about nine hours before entering Beibu Bay on Saturday morning.

The typhoon could worsen problems along the Yangtze River basin, which acts as an unofficial dividing line between the north and south of the country and has seen rivers and lakes swelled by days of rainfall.

The head of the flood control office at the Yangtze River Water Resources Commission told AFP on Thursday that if the region continued to be drenched, China could experience the worst floods in 12 years.

-----Meteorological authorities have warned that still more heavy rain was expected in flood-hit regions in coming days.

Rains and flooding have caused economic losses totalling 116 billion yuan (17 billion dollars) since the start of the year, state television said.

China's Ministry of Civil Affairs and Ministry of Finance on Friday jointly allocated 370 million yuan as disaster relief to the five provinces of Anhui, Hubei, Hunan, Guizhou and Yunnan, as well as Chongqing Municipality.

http://www.google.com/hostednews/afp/article/ALeqM5g2XbWWJGUzY04aZAuvdK8i2Qpn-A

Elsewhere in Eur-Asia, it’s heat and a lack of rain that’s hammering Russia and Kazakhstan.

Russia swelters amid drownings and drought

Jul 16 07:39 AM US/Eastern

Russians sweltered Friday in the hottest weather since the Stalin era as droughts caused crop devastation across the country and hundreds drowned in bathing accidents often influenced by alcohol.

Friday was expected to break a record in Moscow, topping 33 degrees Celsius, the highest temperature that day since 1938, according to the state weather centre.

At the weekend, the temperature was forecast by the state weather centre to hit 37 degrees in central Russia.

An emergency drought situation has been declared in 19 of Russia's 83 regions with crops dying on an estimated 9.6 million hectares of fields.

The drought-struck areas were suffering "colossal destruction," Agriculture Minister Yelena Skrynnik said Tuesday at a meeting with President Dmitry Medvedev.

The coldest place on earth in winter, Oimyakon in the Sakha region, was forecast to swelter at 32 degrees centigrade on Friday, the ITAR-TASS news agency reported.

----The Kremlin cancelled a weekly ceremonial performance by mounted troops from the presidential regiment, due to fears that the troops and horses would suffer in the heat.

Customers have flocked to buy air conditioners and fans to beat the heat in airless concrete office blocks and apartment buildings.

"The yearly stock of air conditioning systems and fans has already sold out, and we had to order extra," said Nadezhda Kiselyova, a spokeswoman for electronics chain M-Video.

http://www.breitbart.com/article.php?id=CNG.451d75f4046267a2e4f0877759e03979.541&show_article=1

Drought-hit Kazakh grain crop to fall by up to 30%

Kazakhstan has confirmed suspicions that, like neighbouring Russia, it is suffering significant crop damage to drought, forecasting a slump of up to 30% in grain production.

The smallest member of the Black Sea agricultural triumvirate will harvest 14.5m-15.5m tonnes of grain this year, Arman Yevniyev, Kazakhstan's deputy agriculture minister, said.

The sharp fall from last year's 20.8m-tonne crop reflects in part lower sowings of grains, which some farmers have turned away from in favour of oilseeds, but also the dry weather which is devastating Russian crops.

"There was drought in some regions and conditions were difficult there," Mr Yevniyev said.

Below forecasts

He added that "the general state of the crop is satisfactory" with at most 10% in poor condition.

Nonetheless, the decline forecast for Kazakhstan's harvest would be even more severe than that expected Russia, which analysts currently see as suffering at most a 17% slide in grains production.

Indeed, Mr Yevniyev's data represents a huge departure from US Department of Agriculture estimates, regarded as the global benchmark.

http://www.agrimoney.com/news/drought-hit-kazakh-grain-crop-to-fall-by-up-to-30percent--1954.html

But in the Ukraine, too much rain is the problem. The breadbasket of Europe grows a drought tolerant variety of wheat, too much rain isn’t helpful nor often the problem. Below the Ukraine, latest grain news from the EU.

Ukraine confirms weaker hopes for grain harvest

09:59 UK, 15th July 2010

Ukraine's government has confirmed reports of weaker hopes for its grains crop, slicing its harvest forecast by a further 3m tonnes, as producers also lowered their sights.

The farm ministry, making its second downward crop revision in three weeks, cut its harvest estimate to 42m tonnes from 45m-45.5m tonnes.

The Ukrainian Grain Confederation, or UAK, an association of producers and traders, also unveiled a cut in its forecast, of 2m-3m tonnes to 44m-45m tonnes.

The downgrade is the latest in a series for major grain producers, with European Union hopes also cut on Thursday by high-profile analysis group Strategie Grains

However, unlike its neighbours, Kazakhstan and Russia, Ukraine has suffered from too much rain rather than too little, affecting grain quality as well as yields.

'Serious losses'

Gluten, the protein key to food uses of wheat such as breadmaking, was "being washed out even as you look", the ministry said.

The comments follow a warning from Viktor Slauta, the deputy prime minister with agricultural oversight, who told a government meeting that Crimea, in the south of Ukraine, had suffered 22 successive days of rain.

http://www.agrimoney.com/news/ukraine-confirms-weaker-hopes-for-grain-harvest--1984.html

Wheat hits fresh highs, after cut to EU crop hopes

19:04 UK, 15th July 2010

Wheat prices soared 6% in London and Paris to their highest for nearly two years after Strategie Grains said that poor weather had cost European Union farmers their hopes of raising soft wheat production this year.

The influential analysis group slashed by 3.6m tonnes to 129.5m tonnes its forecast for the crop, leaving it below last year's 129.8m-tonne result despite an increase in sowings.

Many analysts had hoped that the EU would at least beat last year's result, thanks to greater plantings. The US Department of Agriculture last week pegged the region's overall wheat harvest coming in more than 3m tonnes high than 2009's.

The revision, the latest in a series of downgrades to crops from Canada to Western Australia, came as Ukraine confirmed it was also cutting estimates for its harvest again.

http://www.agrimoney.com/news/wheat-hits-fresh-highs-after-cut-to-eu-crop-hopes--1983.html

We will continue following this story with interest since it’s now getting too late in the year for a change in the weather to alter Eur-Asia’s outcome positively. Unfortunately that isn’t true for a continuing negative crop impact, especially in rain hit southern China. If as seems likely, we are/have entered a new solar cycle period of a couple of decades of global cooling, this is the worst possible news for global inventories. Ideally we need bumper crops and a strong global build up of grain inventory to record levels. 2010 is shaping up to be a year of inventory decline. A high risk trade here is to go long out of the money call options for year end. The opposite seasonal trade to a normal crop year, where the northern hemisphere harvest pressure usually delivers lower prices in the fourth quarter of each year.

We end with news that’s sure to get spun wildly by the IPCC and the man made global warming nutters.

World's hottest year on record expected

The world is on course to record the hottest year on record, threatening droughts worldwide, forecasters have said

Published: 11:45PM BST 16 Jul 2010

For the first six months of the year, 2010 has been warmer than the first half of 1998, the previous record holder, by 0.03 degree Fahrenheit, said Jay Lawrimore, chief of climate analysis at the federal National Climatic Data Center.

A period of a El Nino weather pattern is being blamed for the hot temperatures globally.

"We had an El Nino episode in the early part of the year that's now faded but that has contributed to the warmth not only in equatorial Pacific but also contributed to anomalously warm global temperatures as well," Mr Lawrimore said.

Abnormally warm temperatures have been registered in large parts of Canada, Africa, tropical oceans and parts of the Middle East.

Northern Thailand is struggling through the worst drought in 20 years, while Israel is in the middle of the longest and most severe drought since 1920s.

In Britain, this year has been the driest since 1929.

Also, Arctic sea ice has melted to its thinnest state in June.

-----"This year the fact that the El Nino episode has ended and is likely to transition into La Nina, which has a cooling influence on the global average temperature, it's possible that we will not end up with the warmest year as a whole," Mr Lawrimore said.

http://www.telegraph.co.uk/topics/weather/7895681/Worlds-hottest-year-on-record-expected.html

Cue pictures of drowning polar bears and starving Canadians unable to club baby seals on missing ice. No chance that this is related?

A Puzzling Collapse of Earth's Upper Atmosphere
July 15, 2010: NASA-funded researchers are monitoring a big event in our planet's atmosphere. High above Earth's surface where the atmosphere meets space, a rarefied layer of gas called "the thermosphere" recently collapsed and now is rebounding again.
"This is the biggest contraction of the thermosphere in at least 43 years," says John Emmert of the Naval Research Lab, lead author of a paper announcing the finding in the June 19th issue of the Geophysical Research Letters (GRL). "It's a Space Age record."

The collapse happened during the deep solar minimum of 2008-2009—a fact which comes as little surprise to researchers. The thermosphere always cools and contracts when solar activity is low. In this case, however, the magnitude of the collapse was two to three times greater than low solar activity could explain.

"Something is going on that we do not understand," says Emmert.

The thermosphere ranges in altitude from 90 km to 600+ km. It is a realm of meteors, auroras and satellites, which skim through the thermosphere as they circle Earth. It is also where solar radiation makes first contact with our planet. The thermosphere intercepts extreme ultraviolet (EUV) photons from the sun before they can reach the ground. When solar activity is high, solar EUV warms the thermosphere, causing it to puff up like a marshmallow held over a camp fire. (This heating can raise temperatures as high as 1400 K—hence the name thermosphere.) When solar activity is low, the opposite happens.

Lately, solar activity has been very low. In 2008 and 2009, the sun plunged into a century-class solar minimum. Sunspots were scarce, solar flares almost non-existent, and solar EUV radiation was at a low ebb. Researchers immediately turned their attention to the thermosphere to see what would happen.
More + diagrams
http://science.nasa.gov/science-news/science-at-nasa/2010/15jul_thermosphere/

Have a great weekend everyone.

"Man is the only animal that can remain on friendly terms with the victims he intends to eat until he eats them."

Samuel Butler.

GI.

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