Dec. 3 (Bloomberg) -- Corn and soybeans rose to two-week highs in Chicago on speculation that dry weather threatening crops in Argentina will boost demand for supplies from the U.S., the biggest grower and exporter of both crops.
Half of Argentina’s growing area is suffering from moisture deficits, the Commodity Weather Group LLC said in a report today. Temperatures will rise close to 100 degrees Fahrenheit (38 degrees Celsius) next week, increasing plant stress. The country is the second-biggest corn exporter and third-largest soybean shipper.
“We have increasing supply concerns supporting the markets,” said Gary Rhea, the president of Risk Management Partners in Des Moines. “Any time you have a pullback in prices, the consumer is buying because they are afraid of shrinking supplies.”
Corn futures for March delivery rose 11 cents, or 2 percent, to $5.665 a bushel at 10:36 a.m. on the Chicago Board of Trade, heading for a second straight weekly gain. Earlier, the price touched $5.685, the highest since Nov. 16.
Soybean futures for January delivery rose 13 cents, or 1 percent, to $12.9275 a bushel in Chicago. A close at that price would leave the oilseed up 4.5 percent this week, the biggest gain since mid-October. Earlier, the price reached $12.965, the highest since Nov. 15.
On Nov. 9, corn reached a 26-month high of $6.175 after the U.S. Department of Agriculture said adverse weather had reduced the size of the domestic crop. Soybeans touched $13.485 on Nov. 12, the highest since August 2009, as Chinese demand surged.
“The U.S. just doesn’t have a cushion of inventories to make up for any crop problems,” Rhea said. “Until there is an improvement in global production, the market is going to be supported by diminishing supplies.”
U.S. corn production will total 12.54 billion bushels, less than last year’s record 13.11 billion, the USDA said last month. Before next year’s harvest starts in September, unsold U.S. supplies will total 827 million bushels, the lowest since 1996, the agency said.
U.S. soybean inventories are forecast at 185 million bushels on Aug. 31, the USDA said in November, when the estimate was slashed for a third straight month.
Corn is the biggest U.S. crop, valued at $48.6 billion in 2009, followed by soybeans at $31.9 billion, government data show.
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