Corn Futures Rebound From Six-Week Low on Adverse Weather; Soybeans Climb
Corn futures rebounded from a six- week low on speculation that adverse weather will threaten crops in Brazil and Argentina. Soybeans rose for the second straight day.
Dry weather this week will produce a two-month rainfall deficit of 7 inches (18 centimeters) across fields in South America, according to T-Storm Weather. A La Nina weather event has reduced moisture, the forecaster said. The U.S. is the world’s biggest exporter of corn and soybeans, followed by Brazil and Argentina.
“People are very concerned that the production in South America will be curtailed by the dry weather,” increasing demand for U.S. supplies, said Dan Basse, the president of AgResource Co. in Chicago. “Corn had gotten too cheap,” and producers of food, animal feed and fuel are increasing purchases, he said.
Corn futures for March delivery rose 13.75 cents, or 2.6 percent, to close at $5.43 a bushel at 1:15 p.m. on the Chicago Board of Trade. Earlier, the price touched $5.2025, the lowest for the most active contract since Oct. 8.
Soybean futures for January delivery rose 17.5 cents, or 1.4 percent, to $12.39 a bushel. Yesterday, the price gained 1.7 percent.
On Nov. 9, corn rose to a 26-month high of $6.175 after the U.S. Department of Agriculture said adverse weather reduced the size of the domestic crop. On Nov. 12, soybeans reached $13.485, the highest since August 2009, as Chinese demand surged.
La Nina is a global-weather pattern caused by cooling equatorial waters in the Pacific Ocean.
China’s Outlook
Prices also rose on speculation that China’s steps to cool the economy are aimed at industries outside agriculture and food, said Jim Gerlach, the president of A/C Trading Inc. in Fowler, Indiana.
The China Banking Regulatory Commission said yesterday it will increase loans to the agricultural industry with an emphasis on crops facing shortages, including rice, corn, vegetables, cotton and sugar.
China’s northeastern Heilongjiang province, the country’s top supplier of corn and soybeans, said today that large buyers of grain, including Cofco Ltd., Chinatex Corp., and foreign- owned companies, must report to authorities every five days on the progress of their purchases in the province.
“Some of China’s actions really make you wonder what’s going on regarding their domestic grain reserves and how much longer they’ll be able to jawbone the market lower,” Gerlach said. “If Chinese grain production is so stellar, why do they appear to be doing all they can to expand and track production?”
Corn is the biggest U.S. crop, valued at $48.6 billion in 2009, followed by soybeans at $31.8 billion, government data show.
To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
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