Oh boy! Now I can only imagine the volatility in the electronic oil market tonight, especially after last weeks sell off.
I really believe that we will see tensions flare again between Israel and Lebanon, I mean the UN troops are barely trickling in so slowly, and France whose supposed to be leading the charge, has scaled back the number of troops it's sending. This latest news and ongoing obstinent behavior from Iran, and then in the next month or two a test of nuclear weapons in North Korea, plus at least one hurricane in the Gulf, could spell much higher oil and metals prices.
The oil price rise could mean a rally in sugar and corn which are both vastly oversold in my opinion. When the funds pour back into these markets they will do so with a vengeance and the markets could go up just as fast or faster than they came down. It's all just one headline away. All of this came up when I was at Princeton Friday with a group of speakers and it created quite a lively debate indeed.
Below is the story on Iran and then an interesting one on China and biofuels and how they will become a net importer of corn by 2008 whixch is why we are buying 2008 corn in RTA. Best, Kevin
Iran tests short-range missile
Action could create new tensions with West
The Associated Press
TEHRAN, Iran - Iran on Sunday test-fired a surface-to-surface short-range missile a day after its army launched large-scale military exercises throughout the country, state-run television reported.
"Saegheh, the missile, has a range of between 80 to 250 kilometers (50 to 150 miles)," the report said.
It said the missile was tested in Kashan desert, about 150 miles southeast of Tehran, the capital.
Saegheh means lightning in Farsi.
Iran has routinely held war games over the past two decades to improve its combat readiness and to test equipment such as missiles, tanks and armored personnel carriers.
But the new tests, in the wake of the Lebanon-Hezbollah fighting, seemed certain to create new tensions with the West.
State-run television said the missile was built based on domestic know-how, although outside experts say much of the country's missile technology originated from other countries.
State-run TV showed video showing 10 missiles being launched from mobile launching pads.
Iran already has ballistic missileIran said it launched the new military exercises Saturday to introduce a new defensive doctrine. They are being held in 14 of the country's 30 provinces and could last as long as five weeks, the government has said.
The Islamic Republic, which views the United States as an arch foe, is concerned about the U.S. military presence in neighboring Iraq and Afghanistan.
It also has expressed worry about Israeli threats to destroy its nuclear facilities, which the West contends could be used to make a bomb but which Iran insists are for civilian uses only.
Iran is already equipped with the Shahab-3 missile, which means "shooting star" in Farsi, and is capable of carrying a nuclear warhead. An upgraded version of the ballistic missile has a range of more than 2,000 kilometers and can reach Israel and U.S. forces in the Middle East.
Last year, former Defense Minister Ali Shamkhani said Tehran had successfully tested a solid fuel motor for the Shahab-3, a technological breakthrough for the country's military.
Iran's military test-fired a series of missiles during large-scale war games in the Persian Gulf in March and April, including a missile it claimed was not detectable by radar that can use multiple warheads to hit several targets simultaneously.
After decades of relying on foreign weapons purchases, Iran's military has been working to boost its domestic production of armaments. Since 1992, Iran has produced its own tanks, armored personnel carriers, missiles and a fighter plane, the government has said. It announced in early 2005 that it had begun production of torpedoes.
URL:
http://www.msnbc.msn.com/id/14432175/Iran says it will not stop enriching uranium: Reuters
By Robert Daniel
Last Update: 7:03 AM ET Aug 20, 2006
TEL AVIV (MarketWatch) -- Iran said it would not stop enriching uranium, rejecting the main condition attached to a package of incentives proposed by six western nations, Reuters reported. The offer was made in June by the U.S., Russia, China, France, Britain and Germany, and Tehran has said it would give its formal response by Tuesday. "We are not going to suspend" enrichment, Foreign Ministry spokesman Hamid Reza Asefi was quoted by the news agency as saying. "The issue was that everything should come out of negotiations, but suspension of uranium enrichment is not on our agenda." In July, the United Nations Security Council resolved that Iran suspend enrichment by Aug. 31 or possibly face sanctions.
China Targeting Growing Biofuels 12x by 2020; 15% of Transportation Fuels
13 August 2006
China is planning on a surge in biofuels, especially biodiesel. Click to enlarge.
China, already the world’s third largest ethanol producer, is planning on a dramatic expansion of its production and use of biofuels for transportation from about 1 million tonnes of ethanol and biodiesel in 2005 to 12 million tonnes in 2020. Twelve million tonnes of biofuels would represent about 15% of the transportation fuel pool in 2020.
In China, diesel consumption is twice that of gasoline. Therefore, of that 12 million tonnes of biofuels, China wants biodiesel to represent 8 million (about 2.4 billion gallons US), according to a recent report by the USDA Foreign Agricultural Service. With biodiesel production in 2005 at only 100,000 to 200,000 tonnes (30 million to 60 million gallons) that represents at least 3,900% growth in 15 years.
Chinese consumption of diesel and gasoline. Click to enlarge.
In 2005, China produced 920,000 tonnes of ethanol, 80% of that from corn. This year, corn is expected to provide 90% of the feedstock. Industrial consumption of corn in China represents 20% of the total corn demand, and of that, ethanol production accounts for 40%. The expansion of ethanol production to 4 million tonnes by 2020 would force China to become an importer of corn, absent a role for other feedstocks or production processes, according to the report.
The USDA report notes that sugarcane, sugar beets and wheat are unlikely feedstocks for the Chinese ethanol industry, although sorghum and cassava have potential. The ethanol industry will look long-term to cellulosic ethanol.
Generally, cellulosic ethanol is not commercial viable, but China will test this with the first cellulosic ethanol production plant up and running by 2008. [
Earlier post.] When viable, in China, most production plants will retrofit current ethanol production plants for lignocellulose production.
Although the potential demand for biodiesel in China is enormous—as is reflected in the goal for 2020—China’s primary difficult it the lack of eligible feedstocks.
China is a net importer in all the major edible vegetable oils, the largest importer in the world. Coupled with the lack of fatty organic matter, the lack of land upon which new crops could grow exacerbates the difficulty of biodiesel production.
...Biodiesel’s future in China relies on three key factors:
1. Government support and NDRC defining a clear plan for expansion, not only for biodiesel production, but also for the harvesting of NGB crops.
2. Research and development to solidify technologies for production.
3. Defining and obtaining key organic sources for production. Potentials inputs include rapeseed, Jatropha nuts, switchgrass, sunflower seeds, Chinese pistachio, peanuts, sesame seeds, Barbados nuts, Fufang vines, Yousha bean, and Chinese dogwood nuts.
Rapeseed, the report notes, is a promising oilseed for biodiesel and is a potential source of biodiesel production for China. If rapeseed were planted during the off-season in the more than 29 million hectares left fallow in the central region of China (in the regions surrounding the Yangtze River, the Yellow River, and the Huai River) the harvest could produce more than 18.5 million MT of biodiesel.
China is also exploring Jatropha and Chinese pistachios, other oil plants, for potential biodiesel sources.
Biofuel development will impact on food self-sufficiency and food security, which has slowed the Chinese government’s development of the biofuel sector...If ethanol production remains as profitable as it is at present, the cultivation of crops for ethanol could displace food crops, reducing food production.
...If biofuel production and consumption continues in China, China may soon see a change in its trade balance. Already there has been a change in trade trends in biofuel feedstock such as corn, wheat, sugar, and cassava. China’s corn exports will begin to diminish, and various industry sources predict that China will become a net corn importer by 2008.
Resources:
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China, Peoples Republic of: Bio-Fuels, An Alternative Future for Agriculture 2006 (GAIN Report Number: CH6049)
http://www.greencarcongress.com/2006/08/china_targeting.html
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