Corn Advances as Dry, Warm Weather in Argentina May Limit Grain Production

Corn futures rose for the first time in three days in Chicago on concern that dry weather in Argentina will hold back production in the second-largest shipper of the grain, depleting global stockpiles.

Corn for March delivery gained 0.8 percent to $6 a bushel on the Chicago Board of Trade. The grain has slipped 4.6 percent so far this year, after surging 52 percent in 2010.

A storm system forecast to drift across Argentina through Jan. 11 isn’t expected to bring significant rainfall to the driest areas, T-Storm Weather LLC said in a report e-mailed today. Several days of heat will follow in the driest areas of the Argentine corn and soybean belt, it said.

A “drying trend is likely to return this week, so crop concerns are likely to re-emerge,” Commonwealth Bank of Australia said in a report e-mailed today.

The corn harvest in Argentina will decline to 20.4 million metric tons this year from 22.5 million tons, after drought hurt the crop, the Buenos Aires Cereals Exchange said Jan. 6. The exchange’s estimate compares with the U.S. Department of Agriculture forecast last month for 25 million tons.

The USDA is scheduled to release a crop report on Jan. 12. Global corn stocks may be 127.3 million tons at the end of this season, compared with last month’s USDA outlook for 130 million tons, according to the average estimate of 14 analysts surveyed by Bloomberg. Inventories are forecast to fall from an estimated 147.2 million tons a year ago.

Global soybean inventories will drop to 58.78 million tons at the end of this season, from 60.4 million tons a year earlier, according to the survey. That compares with the USDA’s estimate last month of 60.1 million tons.

China Demand

March-delivery soybeans rose 0.4 percent to $13.70 a bushel in Chicago. The oilseed, which advanced 34 percent last year, has slipped 2.4 percent this month.

China, the top soybean buyer, lifted imports of the oilseed by 29 percent to a record in 2010 as the domestic crushing industry expanded to supply higher consumption of livestock feed and cooking oil.

The world’s most populous country bought 54.8 million tons of soybeans last year, including 5.43 million tons last month, the customs office said on its website.

Wheat for March delivery gained 0.5 percent to $7.78 a bushel in Chicago. Milling wheat for March delivery traded on NYSE Liffe in Paris advanced 0.2 percent to 251.50 euros ($324.86) a ton.

Global wheat reserves will drop to 175.2 million tons from 196.7 million tons a year ago, according to the Bloomberg survey. The USDA estimated stockpiles would decline to 176.7 million tons last month.

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net.

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net.