Trader's Highlight

DJI- NEW YORK, Aug 14 (Reuters) - Wall Street stocks ended little changed on T uesday after early gains supported by stronger-than-expected U.S. retail sales numbers faded, while oil prices rose on tepid growth data in Europe that underpinned hopes for fresh monetary stimulus.

A rise in U.S. retail sales in July, the first increase in four months, added to uncertainty in the bond market over whether growth has slowed to the point at which the U.S. Federal Reserve is likely to launch a new round of stimulus when it meets next month. Treasury prices fell.

Prices of German government bonds also fell after data showed that France and Germany, the euro zone's two biggest economies, had withstood a contraction in the currency bloc in the second quarter.

The U.S. retail sales data propelled gains in the dollar against the yen and pushed down the price of gold.

Analysts have expected equities would struggle to move higher from current levels on low volume as traders hope for new easing measures from U.S. and European central bankers.

"There was a bit of a late skid into the close. It could simply be some profit-taking. We have had a good rally," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati.

The S&P 500 is within a stone's throw of new four-year highs, leaving investors looking for new catalysts to move the market higher. Traders reckon the latest batch of weak data from Europe would pressure the European Central Bank, the Fed or both to act.

The economy of the 17-nation euro zone contracted by 0.2 percent in the second quarter, although Germany eked out growth of 0.3 percent. But even there, a forward-looking sentiment indicator pointed to poorer performance ahead.

The latest European data kept alive expectations for stimulus, without unnerving investors who are looking for clues on whether the Fed, the European Central Bank or both will help their economies with more bond purchases.

The euro zone data followed worrying Chinese trade figures on Friday and Monday's report showing a slowdown in growth in Japan. Both lent support to the view that central banks will be forced to act as early as next month to boost flagging global growth.

In the United States, the retail sales gains for July, which at 0.8 percent marked the biggest increase since February, followed other data on housing and jobs that have raised hopes that an earlier economic slowdown may prove to be temporary.(nL6E8JE81F)

The Standard & Poor's 500 index hit its highest level since May 1. The S&P has risen for seven of the last eight sessions, with concerns of risk from Europe's debt crisis still casting a cloud.

"Today's data are supportive of the stock market. That's a healthy development," said David Joy, chief market strategist at Ameriprise Financial in Boston.

The Dow Jones industrial average .DJI closed up 2.71 points, or 0.02 percent, at 13,172.14. The S&P 500 Index .SPX ended down 0.18 point, or 0.01 percent, at 1,403.93. The Nasdaq Composite Index .IXIC finished down 5.54 points, or 0.18 percent, at 3,016.98.

In the bond market, U.S. Treasuries and German Bund prices fell as traders reduced their safe-haven holdings in the wake of the less-dire growth data on German and France.

"I don't expect the Fed will be doing anything for at least a month and the same for the ECB," Ameriprise's Joy said.

Benchmark U.S. 10-year notes US10YT=RR were down 18/32 in price at 99-2/32 with the yield at 1.727 percent, up 6 basis points. Earlier, the 10-year yield was close to its 100-day moving average of 1.7443 percent, which is a technical indicator that U.S. yields might head higher.

"As sentiment improved during the past couple of weeks, the demand for bonds as a perceived safe haven has diminished, and the bond market has started to decline," said chief macro strategist Gary Thayer at Wells Fargo Advisors in St. Louis, Missouri.

NYMEX- NEW YORK, Aug 14 (Reuters) - U.S. crude futures rose on Tuesday on supportive U.S. retail sales data and ongoing potential threats to Middle East oil supplies, ahead of weekly U.S. petroleum inventory reports that were expected to show a drawdown.

 

CBOT SOYBEAN- Chicago Board of Trade soybean futures ended mixed after a choppy session, with most-active November SX2 down on profit-taking and improving crop weather in the U.S. Midwest, traders said.

* Cooler, wetter weather in the U.S. Midwest over the next week should slow further crop deterioration from the worst drought in more than a half century, although updated midday forecasts removed some of the expected rains. (nL2E8JE39T)

• Nearby soybean contracts underpinned by bullish monthly crush data. The National Oilseed Processors Association reported the U.S. soybean crush for July at 137.380 million bushels, above an average of trade estimates for 132.5 million. (nL2E8JE30L)

• August soybeans SQ2 surged on short-covering ahead of the contract's midday expiration and settled up 23-3/4 cents at $16.80 a bushel. Open interest was down to 280 contracts ahead of the trading session.

• CBOT soymeal futures closed higher, gaining against soyoil on meal/oil spreads.

• USDA on Monday said 30 percent of the U.S. soybean crop was rated in good to excellent condition, an improvement from 29 percent the previous week.

• The crop continues to develop ahead of the normal pace. USDA said 83 percent of the crop had reached the pod-setting phase by Aug. 12, ahead of the five-year average of 70 percent. US/SOY

• Sunflower seed production in the European Union, Ukraine and Russia will drop 11.7 percent to a total of 24.82 million tonnes this year, from 28.12 million tonnes a year ago - analyst Oil World. (nL6E8JE4BT)

FCPO- SINGAPORE, Aug 14 (Reuters) - Malaysian crude palm oil futures hit a fresh 10-month low on Tuesday as improving output and slower exports in the Southeast Asian country stirred concerns over swelling stocks.

On top of that, recent rains in the United States that could raise harvest forecasts for soybeans helped ease some concerns over tightening global oilseed supply and weighed on edible oil markets in Asian trade. (nL2E8JD51T)

Traders also avoided taking long positions ahead of export data for the first half of August due on Wednesday.

"Tomorrow's exports are unlikely to be good, and production could climb even higher in August. Prices should be supported at the 2,800-ringgit level," said a dealer with a foreign commodities brokerage in Malaysia.

At closing, benchmark October palm oil futures FCPOc3 on the Bursa Malaysia Derivatives Exchange dropped 0.5 percent to 2,858 ringgit ($918). The contract earlier touched a low of 2,820 ringgit, a level not seen since Oct 18 last year.

Total traded volumes were high at 31,724 lots of 25 tonnes each, compared to the usual 25,000 lots.

On the technicals front, palm oil has support at 2,838 ringgit, said Reuters market analyst Wang Tao. (nL4E8JD0J3)

Malaysia's palm oil inventory level touched its highest since February at nearly two million tonnes in July, snapping four straight months of losses, thanks to improving output and lacklustre demand. (nK7E8EU01A)

But rising production may not last till the end of the year with Australia's weather bureau on Tuesday saying El Nino was in its early stages, potentially bringing dry weather to Southeast Asia and hurting some palm oil output. (nL4E8JE174)

The market will be watching fresh export data on Wednesday after a sluggish showing for the first 10 days of August. PALM/ITS PALM/SGS

Weaker demand from China and Europe has also weighed on Indonesia as the top palm oil producer lowered its estimate for exports to 17.6 million tonnes in 2012, an official from the Indonesian Palm Oil Association (GAPKI) said late on Monday.(nL4E8JD37J)

REGIONAL EQUITY- BANGKOK, Aug 14 (Reuters) - Most Southeast Asian stock markets ended higher on Tuesday buoyed by strength in large-cap banks and commodities-related stocks such as Singapore's Noble Group Ltd NOBG.SI, sending the index to a one-year closing high.

The Singapore Straits Times Index .FTSTI was up 0.75 percent at 3,087.84, with shares in commodities firm Noble surging 12 percent after it reported a 39.3 percent rise in its April-June net profit. (nSN4NHkLJ)

In Bangkok, the SET index .SETI extended its gain for a sixth session, adding 0.6 percent to 1,226.82, its highest close in more than three months.

Top lender Bangkok Bank Pcl BBL.BK rose 3.1 percent to 203 baht, its highest level seen since late 1996 amid good buying interest in banks seen as a beneficiary of a growth in domestic economy.

Elsewhere, Malaysia's main index .KLSE rose for a fifth session, ending up 0.4 percent at a record closing high of 1,652.90. Indonesia .JKSE gained 0.5 percent, reversing Monday's 0.9 percent fall.

Vietnam .VNI advanced 0.8 percent to the highest close in almost two months. Bucking the trend, the Philippines .PSI eased 0.1 percent, halting a two-day rising streak.

RTRS-Indonesia palm export forecast lowered due to economic woes

JAKARTA, Aug 13 (Reuters) - The Indonesian Palm Oil Association (GAPKI) has lowered its estimate for palm oil exports from the world's top producer, an official said late on Monday, due to weaker demand from China and Europe.

Southeast Asia's largest economy is forecast to ship 17.59 million tonnes of palm oil in 2012, Susanto, head of marketing division at GAPKI, told reporters, versus an estimate of between 17.5-18 million tonnes earlier this year.

"Export of crude palm oil and its derivatives in 2012 is estimated to reach 17.59 million tonnes or below our previous target of 18 million tonnes," Susanto said. "One of the reasons is the European economic crisis and Chinese economic growth."

This year palm oil output from Indonesia is expected to be between 23 million and 25 million tonnes, compared with 22.5 million in 2011.

India, China and Europe are the main buyers of Indonesian palm oil, with exports totalling 8.6 million tonnes during the first six months of this year.

RTRS-UPDATE 2-U.S. soybean health improves with rain-USDA

CHICAGO, Aug 13 (Reuters) - The condition of the U.S. soybean crop improved last week, helped by recent rains that may boost harvest prospects for a crop that struggled through much of the summer due to the worst drought in five decades.

The rain also stabilized the corn crop, breaking a string of nine straight weeks where condition ratings dropped due to the scorching temperatures and dry soils, a U.S. Agriculture Department report released on Monday showed.

Ratings for both crops, however, remained at their lowest levels since 1988 and forecasts for harvest remained low even with the recent rainfall. USDA slashed its production and yield estimates for both crops in its supply/demand report released on Friday.

The government rated the U.S. soybean crop 30 percent good to excellent as of Aug. 12, up 1 percentage point from a week earlier and in line with the average of estimates in a Reuters survey of 12 analysts.

The improvement marked the first weekly uptick in soybean conditions since the government started rating this year's crop in early June.

"On the soybeans ... we perked up just a little bit," said Karl Setzer, grains analyst of MaxYield Cooperative. "The big thing is that we did not get any worse. The cooler temperatures, rainfall ... it has been a huge benefit. We could not have seen these rains come at a more perfect time in the development stage of the soybean crop."

The corn crop was rated 23 percent good to excellent, unchanged form a week earlier. Corn conditions also matched analysts' expectations.

The rain could raise harvest forecasts for soybeans, which are still in their critical yield-determining phase of development.

"The rains will help the soybeans that are filling," said Terry Basol, field agronomist with Iowa State University Extension. "The bulk of the soybeans that we have are in that seed fill stage. It is a long growth stage for soybeans."

Soybean plants reach their most critical stage of development -- called pod-setting -- about a month later than corn's reproductive pollination phase. They also can withstand drought a little better because they have a much smaller biomass than corn, and can idle their metabolic activity at night.

This year, both corn and soy plants are maturing one or two weeks earlier than usual after farmers took advantage of one of the mildest winters on record to plant seeds early and at a record pace.

Most of the corn crop has already passed through pollination and farmers were gearing up for harvest in many areas, so market watchers were not raising their harvest forecasts despite the turn to favorable weather.

"Some producers are harvesting corn already while others are finishing up final preparations to begin harvest," the Illinois field office of USDA's National Agricultural Statistics Service said in a report.

Light showers and cooler temperatures are forecast around the Midwest for the next week, said John Dee, an agricultural meteorologist for Global Weather Monitoring.

RTRS-UPDATE 1-Drought relief but no bonanza for US crops

CHICAGO, Aug 13 (Reuters) - Midday weather updates on Monday showed no change from early outlooks for light showers and cooler temperatures over the next week in the U.S. crop belt which will slow deterioration of the drought-stressed corn and soybean crops, an agricultural meteorologist said on Monday.

"Everything looks pretty much the same," said John Dee, meteorologist for Global Weather Monitoring.

Dee said showers and cooler temperatures in the Midwest would slow deterioration of corn and soybean crops but there would be no big jump in crop conditions.

A Reuters poll of 12 analysts on Monday indicated the rains over the past two weeks have helped reverse the season-long decline in U.S. soybean conditions and would stabilize corn conditions that have declined for nine straight weeks.

Dee said light rains fell over the weekend in the northern Midwest and similar rainfall was expected on Monday in Michigan, Indiana and Ohio and from late Wednesday into Friday about 85 percent of the Midwest can expect from 0.30 to 0.80 inch (0.8-2 cm) of rain.

"Temperatures will be more comfortable with highs in the 80s (degrees Fahrenheit) (27-32 degrees Celsius) in the north and the low 90s F in the south," Dee said.

Dee and other crop experts said the U.S. corn crop was already harmed beyond repair by the summer's heat but some of the late planted soy may be helped. "It will allow some of the filling or pod setting soybeans to develop but the damage has been done to the corn crop," he said.

Commodity Weather Group (CWG) said nearly one-third of the Midwest soybean crop remained under stress from lack of moisture and the soybean area stressed by drought may expand slightly over the next 10 days.

Parts of central Illinois, Missouri, Nebraska, western Iowa, southern Wisconsin, southwestern Minnesota and southern South Dakota will be most prone to stress, CWG said.

Also, nearly half of the Delta in the lower Mississippi crop region remains unfavorably dry for late growth in dryland areas, but rains were expected to expand from late this week into late August and will ease moisture deficits, according to CWG.

Trader's Highlight

DJI- NEW YORK, Aug 13 (Reuters) - World stock markets eased on Monday after weak Japanese economic data added to the latest reports showing a slowing global economy, while the euro rose as investors exited bearish bets against the common currency.

European shares posted their worst day in more than a week and U.S. stocks snuffed a six-day rally for the S&P 500 after Japan reported its gross domestic product expanded just 0.3 percent in the second quarter.

Japan's growth was half the expected rate, raising doubts about the global economy while highlighting the impact of Europe's debt crisis on world demand.

In another sign of potential slowing demand, Chinese customs data showed output of refined copper dropped 6.8 percent in July from record high production the previous month. Chinese copper consumption is considered an economic bellwether.

The Dow Jones industrial average .DJI closed down 38.52 points, or 0.29 percent, at 13,169.43. The Standard & Poor's 500 Index .SPX fell 1.76 points, or 0.13 percent, to 1,404.11. The Nasdaq Composite Index .IXIC rose 1.66 points, or 0.05 percent, to 3,022.52.

NYMEX- NEW YORK, Aug 13 (Reuters) - U.S. crude oil futures dipped for a second straight session on Monday after data showing weaker second quarter economic growth in Japan stoked global demand worries and outweighed geopolitical risks related to Middle East tensions.

CBOT SOYBEAN- Most-active November soybean futures SX2 on the Chicago Board of Trade fell more than 2 percent, halting a three-day rally as improving weather in the U.S. Midwest brightened crop prospects and helped trigger fund long liquidation, traders said.

Weather forecasts called for light showers and cooler temperatures over the next week in the U.S. crop belt, which will slow deterioration of the drought-stressed corn and soybean crops - meteorologist.

Analysts surveyed by Reuters expected the USDA later on Monday to rate 30 percent of the U.S. soybean crop in good-to-excellent condition, up 1 percentage point from the previous week, following much-needed rains.

Ahead of monthly data due on Tuesday from the National Association of Oilseed Processors, the average estimate for the July U.S. soy crush was 132.5 million bushels, compared with 134.156 million in June.

The supplement to the U.S. CFTC's weekly report on commitments of traders showed large speculators cut their net long position in CBOT soybeans by more than 15,000 contracts in the week ended Aug. 7, to a net 188,985 contracts.

FCPO- SINGAPORE, Aug 13 (Reuters) - Malaysian crude palm oil futures tumbled to a near ten-month low on Monday, mirroring losses in grains and oilseed markets where traders booked profits from a U.S. drought-driven rally and as rising local stocks weighed on sentiment.

The monthly supply and demand report by the U.S. Department of Agriculture (USDA) forecast a lower soybean output on late Friday, which is slightly bullish for palm oil, but traders said the downgrade had been factored in.

The market continued to price in improving production and a lacklustre demand that pushed Malaysia's palm oil inventory level to a five-month high of nearly two million tonnes in July.

"Global vegetable oils are better supplied than global oilseeds and we therefore expect prices to underperform. The price discount of Bursa palm oil to CBOT soyoil averaged a large $223 a tonne in July and did not spark strong export demand," Rabobank analysts said in a note to clients.

"As a result, we expect this spread to continue to move wider as bullish sentiment remains in CBOT prices with the worst drought in more 50 years continuing to hamper U.S. soybean production," they added.

The benchmark October palm oil futures FCPOc3 on the Bursa Malaysia Derivatives Exchange dropped nearly 2 percent to 2,825 Malaysian ringtgit -- a level unseen since Oct 20. last year. The contract later settled down 0.4 percent to 2,871 ringgit.

Palm oil ended the previous week with a 1.2 percent loss, the fifth consecutive week that the edible oil is in the red.

Total traded volumes stood at 29,649 lots of 25 tonnes each, just slightly lower than the usual 30,000 lots.

REGIONAL EQUITY- Aug 13 (Reuters) - Southeast Asian stock markets mostly edged up on Monday on hopes that weaker economic outlook could spur stimulus measures around the world, but concerns over sluggish growth capped the gains with Jakarta underperforming the region.

The growth concerns trimmed the day's trading volumes as investors stayed on the sidelines for directions from July U.S. retail sales and consumer prices, along with the euro zone's second quarter gross domestic product reading, which are expected to be released on Tuesday.

Singapore's Straits Times Index .FTSTI ended 0.35 percent firmer, the Philippine index .PSI gained 0.16 percent, and Vietnam .VNI, the region's best performer for this year ended 0.14 percent stronger.

Malaysia .KLSE added 0.1 percent to finish at a near record high.

Bucking the trend, Jakarta's Composite Index .JKSE fell 0.9 percent led by financials with a 1.2 percent fall in Bank Mandiri Persero Tbk BMRI.JK and 2.6 percent loss in Bank Negara Indonesia Persero Tbk BBNI.JK.

RTRS- PREVIEW-India's July refined palm oil imports seen down

NEW DELHI, Aug 10 (Reuters) - India's refined palm oil imports are expected to have fallen in July for the second month in a row as importers feared the world's top vegetable oil buyer would raise duties on purchases to cut cheap supplies from Indonesia, a Reuters survey showed.

Traders forecast refined palm oil imports in July to be between 75,000 and 120,000 tonnes, with the average at 96,000 tonnes, down 22.7 percent from June.

The government finally raised the cost of imports from Aug. 1.

India's refined palm oil imports have risen since October 2011, when Indonesia, the world's No. 1 palm oil producer, changed its export taxes to promote downstream products. That prompted India's domestic refiners to demand measures to make the imports costlier.

The Solvent Extractors' Association of India, a leading trade body, will release July import data next week.

In the first eight months of the current year from November, India's refined palm oil imports surged by 89 percent to 1.2 million tonnes from the year-ago period, hitting margins for local refineries.

Traders said refined palm oil imports would return to around last year's average of 90,000-100,000 tonnes a month after the introduction of the protective step.

Total palm oil imports last month rose as prices eased by 4.8 percent, supported by a build-up of stocks in Malaysia, the world's No. 2 producer, and the euro zone crisis.

Palm oil imports rose 9.8 percent last month to 563,750 tonnes, according to the average of a survey of eight traders.

On Friday, benchmark October crude palm oil futures FCPOc3 on the Bursa Malaysia hit a low of 2,844 ringgit ($920) per tonne, back to the lowest levels this year touched on June 15.

Imported refined palm oil was quoted at around $990 per tonne on a cost and freight basis on India's west coast, while imported crude palm oil was quoted at $970 per tonne.

Imports of soyoil rose in July due to the arrival of delayed vessels from South America, while sunflower imports fell, reflecting lower demand for fried foods during the summer.

Soyoil imports in July are seen up 7.7 percent from June to 150,625 tonnes, while monthly sunflower oil imports were down by 11.8 percent to 77,500 tonnes in July, the survey showed.

Total July vegetable oil imports, including small amounts of non-edible oils, are likely to have risen by 4.7 percent to 820,500 tonnes from June.

The higher imports pushed up end-July stocks at Indian ports by 5.8 percent to 750,00 tonnes, it showed.

Imports of vegetable oils are unlikely to drop in the coming months as India's first drought in three years could reduce oilseeds output, leading to more imports in the next year from November.

"Imports could rise to as high as 950,000 tonnes in August," said Sat Narain Agarwal, a Delhi-based trader.

Indian importers will start building up stocks for the September-November festival season, taking advantage of low crude palm oil prices, he added.

About 80 percent of India's total cooking oil imports are palm oils, while the rest are soft oils.



RTRS-UPDATE 5-Argentina hikes biodiesel tax; soy export tax unchanged

BUENOS AIRES, Aug 10 (Reuters) - Argentina tightened its grip on the country's energy sector on Friday by ordering a tax hike on biodiesel exports, a move it said was needed to make domestic fuel prices more affordable, but denied market rumors that it will increase a soybean export tax.

The grains-rich South American country is the world's biggest exporter of biodiesel, a fuel made from soybean oil. The tax, which will go to 32 percent from 20 percent, will go into effect on Saturday, according to a government decree.

The European Union is by far the biggest market for Argentina, which shipped a total of almost 900,000 tonnes of biodiesel in the first half of 2012 for some $1.03 billion, according to industry data.

Government economist Axel Kicillof, who burst onto the national stage when he became the public face of Argentina's nationalization of energy company YPF YPFD.BA in April, justified the tax hike by saying that Argentines are paying more for biodiesel than are foreign buyers.

"This will reduce the domestic price of biodiesel," he told reporters.

Also on Friday the government issued a decree lowering the official price of domestic biodiesel by 15 percent to 4,405 pesos ($0.96) per tonne from 5,195.8 pesos.

"There's not enough demand in the local market to absorb all the biodiesel that's exported," an industry source told Reuters on condition of anonymity. "I think this will end up killing the industry."

Argentine biodiesel production in 2011 was 2.4 million tonnes, of which 1.7 million was exported for about $2.1 billion. The country plans to reach 4.5 million tonnes of annual production by 2013.

Argentine biofuels producers had hoped President Cristina Fernandez would soon raise the compulsory blend requirement for diesel sold domestically to 10 percent from the current 7 percent as a way to boost local demand.

But Kicillof dashed that idea during his comments to reporters. He also dismissed rumors that the government was mulling an increase of export taxes on soybeans, which is currently set at 35 percent.

"This is a better measure than ones that would increase soy export taxes. This is a better way to go," said Kicillof

Chatter about a possible tax hike on international shipments of soy and other raw grains has been in the markets from Chicago to Rosario over the last two weeks, putting downward pressure on prices.

TIGHTER STATE CONTROL

The Fernandez government controls corn and wheat exports through a system of curbs meant to ensure affordable domestic food supplies. The 59-year-old Peronist leader was re-elected last year on promises of increasing the government role in Latin America's No. 3 economy.

The seizure of YPF followed and then a decree was issued last month saying oil companies operating in Argentina must present an annual investment plan. They could face fines or other sanctions, such as the withdrawal of concessions, if they fail to comply.

With its ample water supplies and vast Pampas farm belt, grain powerhouse Argentina is the world's No. 2 corn exporter and No. 3 supplier of soybeans.

But the idle capacity of the country's crushing plants has risen recently due to lower-than-expected soybean output, caused by a drought that hit the Pampas during the 2011/12 growing season.

So, also on Friday, the government lifted a ban on soybean imports, which will now be available to help keep Argentine crushing plants busy.

"We want 100 percent of our biodiesel processing plants to be used by either domestic or imported beans," Kicillof said.

Trader's Highlight

DJI- NEW YORK, Aug 10 (Reuters) - U.S. stocks notched a gain for the sixth session in a row on Friday, while the euro faltered as gloomy Chinese economic data butted up against expectations policymakers could act to shore up the world's economies.

Stock markets' recent rally has been underpinned by comments by European Central Bank President Mario Draghi two weeks ago that the central bank was "ready to do whatever it takes to preserve the euro," raising hopes of heavy bond buying to aid Spain and Italy.

A weaker-than-expected reading in China's July exports on Friday, however, soured the mood and took U.S. stocks lower for most of the day. In addition, new bank loans in China were at a 10-month low, suggesting pro-growth policies have been insufficient and that more urgent action may be needed. The weakness in exports included a 16 percent drop in sales to Europe from a year ago.

"The data from China is concerning because the global economy is still the backdrop for the market. People are still very cautious because of the global growth concerns," said Paul Brigandi, vice president of trading at Direxion Funds in New York.

Some economists said the Chinese central bank could move as early as this weekend to ease policy.

European shares closed lower but Wall Street recovered late in the day in thin trade. The euro headed for its first weekly drop against the dollar and yen in three weeks.

"It makes sense that we'd take a bit of a breather, but momentum has been strong and the fact that we've held steady despite a lack of good news is a good sign the trend will continue," said Joe Bell, senior equity analyst at Schaeffer's Investment Research in Cincinnati.

NYMEX- NEW YORK, Aug 10 (Reuters) - U.S. crude oil futures fell Friday on demand worries, as China's oil imports fell and its total exports were less than expected in July while the International Energy Agency forecast lower growth for oil demand for next year.

For the week, September crude ended higher, gaining for a second straight week. Gasoline futures ended fractionally higher and heating oil dipped 0.8 percent. Both product futures rose for the week, also extending weekly gains to a second in a row.

CBOT SOYBEAN- Soybean futures on the Chicago Board of Trade rose for a third day after the U.S. Department of Agriculture slashed its forecasts of U.S. 2012/13 soy production and ending stocks, traders said.

However, the market pared gains by the close as traders booked profits and as corn and wheat futures fell.

Most-active November soybeans SX2 ended up 0.9 percent for the week, the contract's second straight weekly gain and the seventh in eight weeks.

USDA cut its U.S. 2012/13 soybean production forecast to 2.692 billion bushels, from 3.050 billion in July and below trade estimates for 2.817 billion.

USDA lowered its estimate of the U.S. soy yield to 36.1 bushels per acre, below the average trade estimate of 37.8. It projected U.S. soybean harvested area at 74.6 million acres, below the average estimate of 74.8 million.

USDA cut its forecast for U.S. 2012/13 soybean ending stocks to 115 million tonnes, down from 130 million in July but above an average of trade estimates for 112 million. If realized, the stocks-to-use ratio would be 4.19 percent, the lowest since 1964/65.

Continued export demand from China added support. USDA said private exporters sold 290,000 tonnes of U.S. soybeans to China for 2012/13 delivery.

Argentina ordered a tax hike on biodiesel exports, a move it said was needed to make domestic fuel prices more affordable, but denied market rumors that it will increase a soybean export tax.

FCPO- SINGAPORE, Aug 10 (Reuters) - Malaysian crude palm oil futures ended off an 8-week low on Friday, and posted a fifth straight weekly loss with traders positioning ahead of a key report by the U.S. Department of Agriculture (USDA) later in the day.

Palm oil initially went to its lowest since June 15 after cargo surveyor Intertek Testing Services reported a 1.8 percent fall in exports for the first ten days of August from a month ago. PALM/ITS

But prices pulled back on short-covering ahead of USDA's monthly supply and demand report at 1230 GMT that is likely to show a tighter soy output and squeeze soybean oil supply, shifting some demand to palm oil.

"The USDA report tonight is the most important. If it is bearish, we will see palm oil go down fast to 2,700 and 2,600 ringgit. If it is bullish, it will try to crawl above 3,000 ringgit," said a Malaysian planter.

"People will be watching Olympics but I will be watching the USDA report."

At closing, the benchmark October palm oil futures FCPOc3 on the Bursa Malaysia Derivatives Exchange edged up 0.6 percent to 2,882 ringgit ($925) per tonne. Prices touched a low of 2,844 ringgit, a level last seen on June 15.

Palm oil ended the week 1.2 percent lower, the fifth consecutive week that the edible oil is in the red.

Total traded volumes were high at 28,005 lots of 25 tonnes each on short-covering, compared to the usual 25,000 lots.

REGIONAL EQUITY- Aug 10 (Reuters) - Southeast Asian stock markets ended mostly firmer on Friday, with Indonesia near a three-month high led by financials and on large foreign inflows. Thailand advanced for a fifth straight session.

The region's markets were down in early trade due to weak Chinese trade data for July, but recouped losses later in the day.

Jakarta's Composite Index .JKSE nudged up 0.25 percent, led by a 2.1 percent gain in Bank Rakyat Indonesia Tbk BBRI.JK. The index hit near its highest level since May 9 fed by a net foreign inflow of $70.59 million.

Thailand's top oil firm PTT PTT.BK, with a 1.8 percent gain, helped Thai SET index .SETI add 0.14 percent to close at its highest since July 18.

Singapore's Straits Times Index .FTSTI ended 0.1 percent firmer.

Malaysia .KLSE rose 0.2 percent while the Philippine index .PSI finished 0.1 percent stronger.

RTRS-Brazil raises official 2011/2012 corn crop estimate

SAO PAULO, Aug 9 (Reuters) - Brazil's government raised its estimate for the 2011/12 corn crop to a record 72.7 million tonnes on Thursday, compared to its 69.48 million tonne forecast from July.


It kept its forecast for the now completed soybean crop nearly the same at 66.4 million tonnes compared to 66.37 million tonnes from July.

RTRS- Minimal drought relief forecast for US crops

CHICAGO, Aug 9 (Reuters) - Midday weather updates on Thursday show no major let-up from the relentless drought in the U.S. Midwest that has slashed the corn crop and is now eating away at soybean production prospects, an agricultural meteorologist said.

"No significant shift from the pattern short term, there will be a few light showers but no soaking rains," said Kyle Tapley, meteorologist for MDA EarthSat Weather.

Tapley said light showers and cooler temperatures could be expected through the balance of this week which will provide minimal relief to crops that have been struggling against the yield-robbing impact of the worst drought in 56 years.

"The six to 10-day (next week) is for drier weather with highs in the 90s (degrees Fahrenheit/32-37 degrees Celsius) and drier and cooler weather could be expected in the 11-15 day forecast (into mid-August) in Missouri, Illinois, Indiana and Ohio," Tapley said.

Elsewhere in the Midwest, the outlook for two weeks out is for only minimal showers but cooler temperatures as the 2012 heat wave begins to wind down, Tapley and other meteorologists said.

"There will be some improvement, the cooler temperatures certainly will help. But most of the Midwest has not had enough rain for significant improvement," said Andy Karst, meteorologist for World Weather Inc.

"Crops may stabilize or decline a little more the next couple of weeks," he added.

Rainfall this week totaled 0.25 to 1.00 inch (0.6-2.5 cm) and was scattered over about half of the Midwest, but only about 25 percent received the heavier amount.

"There will be better rains today in the eastern Corn Belt, and the good news is that high temperatures the next couple of weeks will be in the 70s to 80s degrees Fahrenheit rather than 100 F," Karst said.

But "certainly no drought busting rains," he stressed.

Another round of modest showers were forecast for next week that will mimic the occasional downpours of the past couple of days, Karst said.

Commodity Weather Group (CWG) said the Midwest should be slightly wetter and cooler for the next two weeks, but soybeans in the U.S. Delta, a lush crop region near the lower Mississippi Valley, would be drier for the next 10 days.

That dryness would add stress to an already struggling soybean crop.

"Shower potential has become more limited in the next 10 days in the Delta. This will pose the greatest threat to double-crop soybeans in areas of Arkansas and bordering sections of Tennessee and Mississippi," said CWG meteorologist Joel Widenor.

Chicago Board of Trade corn futures soared to record highs on Thursday and the soybean market leaped over 3 percent as investors bought, bracing for government and private projections of sharp declines in domestic crop prospects.

USDA on Friday will release its August crop report and traders were getting prepared for another bull run in prices.

Domestic corn inventories could fall to a 17-year low next summer following this year's harvest, and soybean supplies could drop to their lowest in 32 years as drought continues to trim production prospects, according to a Reuters poll of grain analysts.

Soybean conditions began to stabilize last week on improved weather in a broad swath of the Midwest, while corn conditions declined again. Still, the ratings for both remained the worst since 1988. (nL2E8J635O)

In the past week, extreme drought doubled its grip on the top corn and soybean producing state of Iowa, according to a report by a consortium of climate experts issued Thursday.

The area under extreme drought in Iowa rose dramatically to 69.14 percent from 30.74 percent a week ago.

Drought expanded in other important farm states over the last week as well, to 94 percent of Missouri and more than 81 percent of Illinois for at least extreme drought.

"Every day we go without significant rain ... is tightening the noose," said Mark Svoboda, a climatologist with the University of Nebraska's National Drought Mitigation Center.

Trader's Highlight

DJI- NEW YORK, Aug 9 (Reuters) - The Standard & Poor's 500 extended its rally to a fifth day on Thursday, again eking out a tiny gain as lingering expectations for economic stimulus from central banks lent support to a market lacking new catalysts.

While the S&P 500 has chalked up three-month highs every day this week, the index has climbed only 0.6 percent over the past three sessions - an indication that investors aren't prepared to make aggressive bets despite better-than-expected jobless claims and U.S. trade data.

The Nasdaq outperformed the other two major U.S. stock indexes, led by Cisco Systems Inc CSCO.O after Goldman Sachs added the company to its conviction buy list and Piper Jaffray upgraded it to "overweight." Cisco rose 3.2 percent to $17.70 and was the Dow's biggest percentage gainer.(nL4E8J9668)

The three major U.S. stock indexes seesawed throughout the morning, with the S&P 500 mostly hovering above 1,400 in light trade as investors bet central banks would soon act to support a global recovery that has shown signs of stalling.

"It's almost eerie how flat the market has been. But while there's a risk of our becoming overbought, I don't see why we'd see a decline of any magnitude until we hear what central banks will do," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

The Dow Jones industrial average .DJI slipped 10.45 points, or 0.08 percent, to 13,165.19 at the close. But the Standard & Poor's 500 Index .SPX inched up 0.58 of a point, or 0.04 percent, to 1,402.80. The Nasdaq Composite Index .IXIC gained 7.39 points, or 0.25 percent, to close at 3,018.64.

Markets held on despite a raft of weak Chinese economic data. Annual growth in factory output slowed to its lowest in more than three years in July while annual consumer price inflation hit a 30-month low. (nL4E8J93OR)

"This news is disappointing, but it only emboldens investors that we'll be rescued by central banks somewhere," said Luschini, who helps oversee $54 billion in assets.

Data showed the number of Americans filing new claims for jobless benefits fell last week while the U.S. trade deficit in June was the smallest in 1-1/2 years, hopeful signs for the struggling economy. (nL2E8J92F7)

Beauty products maker Elizabeth Arden RDEN.O forecast 2013 profit above estimates on stronger sales and its shares jumped 13 percent to $44.02. (nL2E8J735Q)

Of the 445 companies in the S&P 500 that have reported second-quarter earnings through Thursday morning, 68 percent have reported earnings above analysts' expectations, in line with the average over the last four quarters.

Volume was light, with about 5.41 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year's daily average of 7.84 billion.

About 52.5 percent of companies traded on the New York Stock Exchange closed higher, while 53 percent of Nasdaq-listed shares gained for the day.

NYMEX- NEW YORK, Aug 9 (Reuters) - U.S. crude futures edged up a penny on Thursday, paring gains as the potential threat to U.S. Gulf Coast energy infrastructure from Tropical Storm Ernesto faded, while the stronger dollar .DXY helped limit gains from supportive economic data.

U.S. gasoline RBc1 and heating oil HOc1 futures rose more than 2 cents, tracking higher with stronger Brent crude LCOc1 futures.

CBOT SOYBEAN-Benchmark November soybean futures SX2 on the Chicago Board of Trade rose 3 percent, their biggest rise in a month, on news of U.S. soy sales to China and positioning a day ahead of the U.S.Department of Agriculture's August supply/demand reports.

* USDA said exporters reported sales of 165,000 tonnes of U.S. soybeans to China for delivery in 2012/13. (nL2E8J92NL)

• Export traders said China may have purchased up to about half a million tonnes of U.S. soybeans for September through December shipment. The spot CIF soybean barges basis at the Gulf GRYM jumped to a three-year peak as exporters scrambled for nearby supplies.

• Bull-spreading noted in CBOT soybean futures, with nearbys gaining against back months, due to the nearby U.S. soy sales to China and expectations of continued strong demand for U.S. supplies until the next South American soy harvest starts in February.

• CBOT soymeal supported by news that a Kansas ethanol plant was suspending operations (nL2E8J976K), a move that was seen restricting supplies of dried distillers' grain, a source of protein in animal feed, and raising demand for soymeal.

• Traders await USDA's monthly supply/demand reports on Friday. Analysts expect USDA to lower its forecasts of U.S. soybean production, yield and harvested acreage, as well as ending stocks for both 2011/12 and 2012/13. (nL2E8J7353)

• Modest rains in portions of the Midwest this week to provide only minimal relief from drought. Rainfall this week totaled 0.25 to 1.00 inch and was scattered over about half of the Midwest, but only about 25 percent received the heavier amount. (nL2E8J9304)

• USDA reported export sales of U.S. soybeans in the latest week at 300,400 tonnes, below trade expectations for 350,000 to 450,000 tonnes.

• USDA reported weekly export sales of U.S. soymeal at 211,700 tonnes, above trade expectations, and soyoil sales at 12,900 tonnes, below expectations.

• Brazil's government kept its forecast for the now completed soybean harvest nearly unchanged at 66.4 million tonnes, compared to 66.37 million tonnes in July. (nE5E8EL040)

• CBOT once again reported no deliveries of soybeans or soymeal against August futures. But soyoil deliveries totaled 846 contracts.

FCPO- SINGAPORE, Aug 9 (Reuters) - Malaysian crude palm oil futures recovered a little on Thursday from a near 8-week low hit the previous day, although traders remained cautious ahead of a slew of key industry reports that could stir more market volatility.

The U.S. Department of Agriculture (USDA) will release its monthly supply and demand report on Friday that is likely to show a cut in estimates for new-crop soy output, potentially limiting edible oil supply and shifting some demand to palm oil.

Traders are looking out for the July stocks data from the Malaysian Palm Oil Board (MPOB), which is likely to have reached a five month high and could help shore up a deficit in global vegetable oil supply. PALM/POLL

"(Palm oil) futures are a little bit oversold so we are expecting some technical pullback. But upside potential is very limited as long as Malaysian stocks remain on the high side," said a trader with a local commodities brokerage in Malaysia.

The benchmark October palm oil futures FCPOc3 on the Bursa Malaysia Derivatives Exchange ended 0.1 percent higher at 2,865 ringgit ($923) per tonne. Prices touched a low of 2,854 ringgit on Wednesday, a level last seen on June 15.

Total traded volumes were thin at 20,741 lots of 25 tonnes each, compared to the usual 25,000 lots.

Malaysian palm oil stocks likely climbed in July to their highest since February as exports slow and production rises, snapping four straight months of declines, a Reuters survey showed on Wednesday. (nL4E8J73WI)

Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance will release exports data for the Aug 1-10 period also on Friday. PALM/ITS PALM/SGS

Palm oil exports suffered a double-digit decline in July as festival demand eased, cargo surveyor data showed. Traders are now pinning their hopes on the recently announced tax-free crude palm oil export quotas of 2 million tonnes to help reduce stocks in coming months.

The industry is also watching out for a possibility of El Nino returning to Southeast Asia, as the hot and dry weather pattern could damage palm oil yields for top producers Indonesia and Malaysia.

REGIONAL EQUITY- BANGKOK, Aug 9 (Reuters) - Southeast Asian stock markets ended mostly higher on Thursday, with Indonesia being led higher by banking shares and Thailand extending gains for a fourth session amid renewed appetite for refinery shares on hopes of an earnings recovery in the second half.

Jakarta's Composite Index .JKSE rose 0.99 percent, led by a 3.8 percent rise in top lender Bank Mandiri Tbk BMRI.JK. Thai SET index .SETI gained 0.3 percent as refiners, including Thai Oil TOP.BK and Esso ESSO.BK, jumped on strong volumes.

Singapore markets were closed for a public holiday.

The Philippine index .PSI slid 0.98 percent, erasing a modest gain of 0.5 percent on Wednesday as investors cashed in gains in the rallying market. It has risen 20.2 percent so far this year, and is Southeast Asia's second-best performer.

Ayala Land Inc ALI.PS, the Philippines' biggest property developer, dropped 5 percent, wiping out a three-day gain of 8.5 percent following the company's release of strong six-month net profit. (nL4E8J329B)

"There will be a shortage in terms of market-moving news, going forward, after the earnings reporting season. I guess it was a perfect time to take some profits off the table," said analyst Jose Vistan of AB Capital Securities Inc in Manila.

RTRS-Indonesia trims 2012 palm oil output forecast by 8 pct

JAKARTA, Aug 9 (Reuters) - Indonesia, the world's top palm oil producer, has lowered its earlier output forecast by 8 percent to 23.6 million tonnes this year, an agriculture ministry official said late on Thursday.

Earlier this year, the same ministry said it expected production of the edible oil to rise 14 percent to 25.7 million tonnes this year, from 22.5 million tonnes in 2011. (nL3E8C933G)

Gamal Nasir, director-general of plantation at the agriculture ministry, gave no reason for the change, at a media briefing in Jakarta.

The Indonesian Palm Oil Association expects crude palm oil output to increase 6 percent to 25 million tonnes in 2012 due to rising plantation areas.(nL3E8C43TJ)

Rising demand for palm oil - used in cosmetics, cookies and ice cream - has led to deforestation that has prompted an Indonesian moratorium on new permits to clear forests from May last year. (nL3E7GQ05F)

Nasir also said output of cocoa beans in the world's No. 3 producer, would be 833,310 tonnes this year, versus January's forecast at 1.3 million tonnes and 712,230 tonnes in 2011.

At the time of the government's January predictions, analysts were sceptical that cocoa output in Indonesia would rise above 1 million tonnes and said the figure would later be revised downwards.

The country is battling disease and adverse weather conditions, which have hampered the country's cocoa supplies in recent years.

Last month, a survey showed that the government's $350 million government programme aimed at reviving Indonesia's cocoa industry had suffered a serious setback after most newly planted trees died. (nL3E8IA3ZL)

Indonesian rubber output for this year will be 3.27 million tonnes versus an early forecast at 2.7 million tonnes, and coffee production is seen at 748,110 tonnes from 718,000 tonnes and 633,990 tonnes in 2011, Nasir added.

In June, the Indonesian Rubber Association (Gapkindo) said output in the world's second-biggest producer would slip by as much as 10 percent to about 2.65 million tonnes this year.

Dry weather and falling global prices, were cited for the fall by Gapkindo. (nL3E8HP1PL)

Indonesia is considering investing $526 million over three years to boost and improve output in its rubber trees, starting in 2013. (nL4E8IJ338)

RTRS- Brazil meat producers want to import Bolivian soy-sources

SAO PAULO, Aug 8 (Reuters) - Meat producers in Brazil's Mato Grosso do Sul state are lobbying the government to approve soy imports from neighboring Bolivia after drought shrank supplies in the world's No. 2 grower, a local official and analysts said on Wednesday.

Farmers want some 300,000 tonnes of Bolivian soybeans to feed their livestock, mostly pigs, a sign that Brazil, the world's top exporter of beef and poultry and growing exporter of pork, suffers from a lack of agricultural planning.

"The federal government is doing a risk analysis because it would be the first time we import soybeans from Bolivia," said an aide for the local government in Mato Grosso do Sul who asked not to be named because she is not an official spokesperson.

"The local government intervened on behalf of these industries because they don't have soy," she said.

Industry groups and conglomerates in southern Brazil have imported small amounts of soy from Paraguay in the past weeks but the government has not stepped in on their behalf.

"Paraguay doesn't have any more soy. Bolivia could be an alternative but they historically haven't had quality soy," said Carlos Davalos, an analyst at Granos Corretora in Mato Grosso do Sul. He said companies in the state have likely imported 18,000 tonnes of Paraguayan soybeans this year.

Brazil's soybean crop, which finished harvest in May, fell to roughly 65 million tonnes from a record 75 million tonnes the year before due to dry weather.

Analysts said farmers were lured by high prices on international markets and the local feeds industry had not prepared adequately for the drought by storing soybeans.

"In the first half of the year China bought a lot of Brazilian soy, so now our stock is zero, in fact it is probably negative," said Alexandre Mendonca de Barros, director of Sao Paulo-based consultancy MB AGRO said.

Speaking on the sidelines of an agro-business conference, he said the scarcity of the grain could drive prices in southern Brazil to $18 per 60-kg bag and the Bolivian soy should not have a problem clearing customs.

Despite the drop in soybean output, Brazil is harvesting a record corn crop. Prices of both grains are rocketing due to drought in the U.S. farm belt and Brazil's exports are expected to reach unprecedented levels going forward.

RTRS- July was hottest month ever for continental U.S. - NOAA

WASHINGTON, Aug 8 (Reuters) - July was the hottest month in the continental United States on record, beating the hottest month in the devastating Dust Bowl summer of 1936, the U.S. government reported on Wednesday.

It was also the warmest January-to-July period since modern record-keeping began in 1895, and the warmest 12-month period, eclipsing the last record set just a month ago, the National Oceanic and Atmospheric Administration (NOAA) said.

This is the fourth time in as many months that U.S. temperatures broke the hottest-12-months record.

The average temperature for July across the contiguous 48 states was 77.6 degrees F (25.3 degrees C), or 3.3 degrees F (1.7 degrees C) above the 20th century average. The previous warmest July, in 1936, averaged 77.4 degrees F (25.2 degrees C).

Along with record heat, drought covered nearly 63 percent of the 48 contiguous states, according to NOAA's Drought Monitor, with near-record drought conditions in the Midwest, where 75 percent of the U.S. corn and soybean crops are grown.

Analysts expect the drought, the worst since 1956, will yield the smallest corn crop in six years, meaning record-high prices and tight supplies. It would be the third year of declining corn production despite large plantings.

The government will make its first estimate of the fall harvest on Friday. It already has cut projections for corn yields by 12 percent due to hot, dry weather in the Farm Belt.

Drought and heat fed each other in July, according to Jake Crouch, a scientist at NOAA's National Climatic Data Center.

Dry soils in the summer tend to drive up daytime temperatures, and because dry soils prevailed over so much of the United States, that helped make things hotter over a wide area, Crouch said by telephone.

"The hotter it gets, the drier it gets, the hotter it gets," Crouch said.

What made this year different from the Dust Bowl summer of 1936 was nighttime temperatures, he said. In the Dust Bowl years, the warmth was largely driven by daytime highs. This July, the record heat was also pushed by warm nighttime temperatures -- the overnight lows weren't that low.

President Barack Obama called on Congress on Tuesday to pass a farm bill so disaster aid can flow to livestock producers. Crop insurance will provide a safety net for row-crop growers but ranchers have much less of a federal cushion. Crop insurance indemnities could be double or triple last year’s level because of the wide-spread drought, say initial estimates by economists.

The drought triggered a surge in the prices for U.S. corn and soybeans to record highs last month, with values rising about 50 percent and 30 percent, respectively, over the past two months.

Sharp price increases the United States, the world’s largest grower and exporter of these two commodity crops, have sparked global concern over potential increases in food prices after a similar surge led to food riots in dozens of countries in 2008.

RTRS- U.S. crops get a break from historic drought

CHICAGO, Aug 8 (Reuters) - Little change in midday weather forecasts were noted for the drought-stricken U.S. Midwest crop region with some relief still expected from showers and cooler temperatures over the next week to 10 da y s, an agricultural meteorologist said on Wednesday.

However, meteorologists also said that a turn to wetter and cooler weather did n o t mean the drought was over.

"No major changes from the theme. There might be a little less rain for southeast Iowa tonight and tomorrow but increased rain in Missouri. There is a little more rain for the weekend in the northwest," said Drew Lerner, a m et eorologist for World Weather Inc.

Lerner said there were no signs that a moisture-robbing heat-producing high pressure ridge would be rebuilding soon over the Midwest crop region.

"No major ridge building, nothing to indicate another buildup of the ridge or extremely hot weather," Lerner said.

The rain and cooler temperatures will provide relief for late-season soybeans, but the change in the weather is arriving too late to help the already severely damaged corn crop.

"It's definitely better than what we've had but I'd be hesitant to call it a drought-buster. Longer-term outlooks still look like a return to warm and dry," said Jason Nicholls, a meteorologist for AccuWeather.

Nicholls said 0.25 inch to 0.75 inch of rain, with locally heavier amounts, was expected in roughly 75 percent of the Midwest from Wednesday through Friday morning, and a similar weather system is expected next week.

"Temperatures will be cooler into the weekend, much more seasonal, then warmer again next week, but not the extreme heat we've had," Nicholls said.

Temperatures in the 80s (degrees Fahrenheit) are expected in the Midwest for the next several days, rather than the 90s F and low 100s F that have been slashing corn and soybean production prospects.

"For the next 10 days we'll chip away at the moisture deficit, but it looks warmer and drier again longer term," Nicholls said.

Corn and soybean prices were driven to record highs in late July as the drought worsened, trimming crop production. Prices for both have since been easing a bit due to the turn to cooler weather accompanied by some showers.

Commodity Weather Group (CWG) on Wednesday said about one-third of the Midwest soybean crop could remain under significant stress from lack of moisture.

CWG also said the popular weather models on which forecasts are based were in some disagreement on Wednesday about the amount of moisture the Midwest is likely to receive over the next couple of days. The dueling forecasts led to some skepticism that significant rains would fall.

And the worst drought in over a half century has spread to the lush U.S. Delta crop region in the lower Mississippi, where vast areas of soybeans, cotton and rice are grown.

"Rain chances are slim in the Delta in the next five days, and stress continues to hinder ... crops in the northwestern half of the region, mainly double-crop soybeans in Arkansas, Mississippi, western Tennessee and western Kentucky," said CWG meteorologist Joel Widenor.

Relentless heat and drought have slashed prospects for the U.S. corn crop to a five-year low. The supply of corn next year is expected to fall to its lowest lever in nearly 20 years. (nL2E8J701W)

The U.S. Department of Agriculture (USDA) on Friday will release its August crop report and traders were bracing for the worst.

U.S. soybean inventories could fall to their lowest level in 32 years as the drought continues to trim U.S. soybean production prospects. (nL2E8J64R1)

Soybean conditions began to stabilize last week on improved weather in a broad swath of the Midwest, while corn conditions declined again. The ratings for both remained the worst since 1988.

RTRS- China's economic slowdown bottoming out, data seen showing

BEIJING, Aug 9 (Reuters) - China's industrial output and fixed-asset investment are expected to show signs of picking up in data on Thursday, indicating that the economy is starting to stabilise after sliding for six straight quarters.

An expected drop in consumer inflation to a 30-month low will suggest the central bank has scope to ease monetary policy further after rate cuts in June and July to keep China's economy on track to meet an official 2012 growth target of 7.5 percent.

Still, any economic pick up will be fragile as the euro zone debt crisis and a sluggish U.S. recovery keep global growth at a low ebb, the main factor that pushed China's new export orders in July into their steepest fall in eight months.

"The recovery will be very modest -- more like stabilisation and gradual improvement," said Yiping Huang, chief economist for emerging Asia at Barclays Capital in Hong Kong.

"Some further policy actions are needed to ensure gradual recovery of growth -- we start to see some improvements that really need to be consolidated and supported," he told Reuters.

China's industrial output growth is forecast to pick up to a four-month high of 9.8 percent year-on-year in July from 9.5 percent in June, a Reuters poll shows. (nL4E8J228I)

Annual growth in fixed-asset investment, in the likes of real estate, roads and bridges, is seen nudging up in January-to-July to 20.5 percent from January-to-June's 20.4 percent, as the government seeks to spur infrastructure investment.

Growth of retail sales, the biggest driver of the economy's expansion in the first quarter, is seen steady though at 13.7 percent.

Economic growth has been sliding since the beginning of 2011, reaching 7.6 percent in the second quarter, the weakest pace since the global financial crisis.

Analysts see a pick up in the third quarter to 7.9 percent and full-year growth of 8 percent, above the official target. (nS7E8CR01Y)

President Hu Jintao and Premier Wen Jiabao have promised to step up policy "fine tuning" in the second half of the year to support the economy.

Apart from cutting rates, Beijing has cut banks' reserve requirements to free up an estimated 1.2 trillion yuan for lending ($191 billion) in a series of moves since November 2011.

It has tweaked taxes and promised to fast-track key government-backed projects. Wen said boosting investment is key to stabilising growth, setting the stage for local officials to roll out ambitious projects.

Analysts expect the data to show consumer inflation in July dropped to 1.7 percent from 2.2 percent in June, a big pullback from a three-year high last July of 6.5 percent.

However, the central bank said in a report last week consumer inflation might rebound after August due to seasonal factors and the rising cost of labour and resources.

Still, there is little sign of inflationary pressures coming from factories. July's data is expected to show that producer prices fell in July by 2.5 percent from a year earlier, its steepest fall since October 2009.

It would mark a fifth straight month of falling producer prices, reflecting the pressures eating into corporate earnings and capping capital spending.

Among the worst hit, profits at Chinese steel mills tumbled 96 percent in the first half of 2012 from a year earlier, the China Iron and Steel Association said in July.

Trader's Highlight

DJI- NEW YORK, Aug 8 (Reuters) - The Standard & Poor's 500 just barely extended a streak of gains to a fourth day on Wednesday, ending above 1,400 in another thinly traded session.

Expectations for stimulus from the European Central Bank and the U.S. Federal Reserve triggered the recent gains, but investors found little reason to keep pushing stocks higher after driving the market to three-month highs.

The three major U.S. stock indexes opened lower but recovered at midday, led by consumer staples .GSPS and health care .GSPA. Both are defensive plays, an indication that investors are keeping their enthusiasm in check.

"It's very positive that we found better footing throughout the session, which indicates that the market's path of least resistance is higher," said Jeff Mortimer, director of investment strategy for BNY Mellon Wealth Management in Boston.

The hope for central bank action comes amid projections of poor growth for coming quarters and lackluster demand worldwide.

In a sign of that weakening demand, McDonald's Corp MCD.N fell 1.7 percent to $87.53 after reporting flat same-store sales in July, the worst performance for the Dow component in more than nine years. (nL2E8J81UK)

"The idea that Europe will remove itself from the brink is clearly contributing to the tone in markets. There's a feeling that central banks will do whatever it takes to provide liquidity, should things get worse," said Mortimer, who helps oversee $171 billion in assets.

The Bank of England gave little indication that it would rush to pour in further stimulus even as it sharply cut its forecast for medium-term economic growth in Britain. France's central bank forecast a contraction in growth going into the third quarter, citing weak demand from the periphery and Britain. (nL6E8J83Y9) (nL6E8J82R3)

The Dow Jones industrial average .DJI rose 7.04 points, or 0.05 percent, to 13,175.64 at the close. The Standard & Poor's 500 Index .SPX edged up just 0.87 of a point, or 0.06 percent, to finish at 1,402.22. But the Nasdaq Composite Index .IXIC slipped 4.61 points, or 0.15 percent, to end at 3,011.25.

Spanish benchmark 10-year debt yields ES10YT=TWEB briefly rose above 7 percent, underscoring the cautious tone from investors recently disappointed by lack of coordination from European officials in their efforts to reignite the economy.

Markets are pricing in the idea that it may take time until Spain asks for a bailout, which would open the door for ECB intervention. (nL6E8J88MU)

Wednesday's market moves appeared to be largely driven by algorithmic trading, signaling a lack of conviction in any one direction.

Volume was light, with about 5.72 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year's daily average of 7.84 billion.

Just under half of the stocks traded on the New York Stock Exchange closed higher on Wednesday, while on the Nasdaq, about 42 percent of shares closed higher.

NYMEX- NEW YORK, Aug 8 (Reuters) - U.S. crude futures fell on Wednesday in choppy trading, snapping a string of three straight higher settlements, after hitting a three-month peak reacting to data showing falling U.S. crude stocks.

U.S. crude oil inventories fell 3.7 million barrels last week, the Energy Information Administration said in its weekly report, a much larger drop than expected.

CBOT SOYBEAN- Soybean futures on the Chicago Board of Trade rose 1 percent to halt a two-day decline, lifted by export demand and positioning ahead of a monthly U.S.government crop report, traders said.

* Unconfirmed rumors swirled that China bought as much as 1 million tonnes of U.S. soybeans this week, along with two cargoes of Argentine soyoil, traders and analysts said.

• USDA said private exporters reported sales of 140,000 tonnes of U.S. soybeans to unknown destinations for 2012/13 delivery. (nW1E8IB022)

• Grain trade awaits USDA's monthly supply/demand reports on Friday. Analysts expect USDA to lower its forecasts of U.S. soybean production, yield and harvested acreage, as well as ending stocks for both 2011/12 and 2012/13. (nL2E8J7353)

• Forecasts for the U.S. Midwest crop belt called for showers and cooler temperatures over the next week to 10 days, potentially helping late-planted soybeans - meteorologist. (nL2E8J82QA)

• The U.S. National Oceanic and Atmospheric Administration said July was the hottest month in the continental United States on record, beating the hottest month in the devastating Dust Bowl summer of 1936. (nL2E8J85IF)

• Meat producers in Brazil's Mato Grosso do Sul state are lobbying the government to approve soy imports from neighboring Bolivia, a local official and analysts said. Farmers want some 300,000 tonnes of Bolivian soybeans to feed their livestock, mostly pigs. (nL2E8J89NI)

• CBOT reported no deliveries of soybeans or soymeal against August futures, while soyoil deliveries totaled 911 contracts.

FCPO- SINGAPORE, Aug 8 (Reuters) - Malaysian crude palm oil prices fell to near eight-week lows on Wednesday on expectations that stocks of the edible oil recovered in July.

Stocks likely climbed in July to their highest since February as exports slow and production rises, snapping four straight months of declines, a Reuters survey showed on Wednesday. (nL4E8J73WI)

Industry regulator Malaysian Palm Oil Board (MPOB) will release official stock and output data on Friday.

"Traders are nervous and funds have built massive long position in grains," said a dealer with a local commodities brokerage in Malaysia. "Fundamentals are not looking good with higher output and tepid demand."

Benchmark October palm oil futures FCPOc3 on the Bursa Malaysia Derivatives Exchange fell 1.5 percent to close at 2,864 ringgit ($922) per tonne. Prices earlier touched a low of 2,854 ringgit, a level last seen on June 15.

Total traded volume picked up after the midday break to 28,933 lots of 25 tonnes each, higher than the usual 25,000 lots.

For the week, investors are awaiting other key figures, including a monthly supply and demand report from the U.S. Department of Agriculture (USDA) that could provide some clues on soybean production trends and the extent of drought damage.

Tighter supplies of soybeans to be converted into soybean oil could shift vegetable oil demand to cheaper palm oil.

Market participants are also looking out for the Malaysian palm oil export data for the first 10 days of August due on Friday, especially after a dismal showing in July. PALM/ITS PALM/SGS

On the weather front, palm oil investors are watching out for a possibility of El Nino returning to Southeast Asia, as the hot and dry weather pattern could damage palm oil yields for top producers Indonesia and Malaysia.

REGIONAL EQUITY- BANGKOK, Aug 8 (Reuters) - Thai shares climbed to three-week highs on Wednesday, in line with most others in the region, as expectations of better earnings outlook boosted large-cap energy stocks including Thai Oil Pcl TOP.BK and PTT Global Chemical Pcl PTTGC.BK.

The main SET index .SETI rose 0.5 percent, extending its gains for a third day to close at 1,214.13. Thai Oil jumped 4.3 percent, with about 30.26 million shares changing hands, 3.9 times the average full-day volume in the last 30 sessions.

Energy shares, dogged by concerns over the impact of weak global oil prices, have been a target of short sellers, market traders said.

"The poor second-quarter earnings by energy firms, such as Thai Oil, confirmed the worst fears of market investors," said Viwat Techapoonphol, senior strategist of broker Tisco Securities. For Thai Oil earnings report, click (nL4E8IU2KX)

"People are more upbeat on the sector's outlook and we saw short sellers bought back energy stocks today," he added.

Gains in market big-caps lifted other Southeast Asian stock markets, with the Philippine index .PSI up 0.5 percent at a 1-month high of 5,308.67. Bucking the trend, Singapore's Straits Times Index .FTSTI fell 0.5 percent as investors booked profits ahead of a National Day holiday on Thursday