Corn and soybeans fell from the highest levels in 29 months on speculation that rains will reduce plant stress in Argentina and boost crop development in Brazil, the two biggest exporters after the U.S.
As much as 1.3 inches (3.4 centimeters) of rain will fall in parts of Argentina the next three days, helping at least 40 percent of the corn crop, a fifth of the soybeans and nearly all the sunflowers, according to T-Storm Weather LLC. Most of Brazil will benefit from normal rainfall the next 10 days, the Chicago-based forecaster said today in a report.
“The weather is improving in South America, and that has encouraged commodity traders to reduce long positions,” said Tim Hannagan, a grain analyst for PFG Best Inc. in Chicago. “Fears that the weather pattern is changing for more beneficial rainfall will keep pressure on the markets today.”
Corn futures for March delivery fell 8.5 cents, or 1.4 percent, to close at $6.205 a bushel at 1:15 p.m. on the Chicago Board of Trade, after earlier reaching $6.34, the highest since July 2008.
The grain surged 52 percent in 2010, the biggest annual gain since 2006, partly because of dry weather in Argentina.
Soybean futures for March delivery fell 24 cents, or 1.7 percent, to $13.79 a bushel, the biggest drop since Nov. 19. Earlier, the price reached $14.09, the highest since August 2008.
The most-active contract gained 34 percent last year, the biggest annual gain since 2007.
Rains beginning Jan. 8 will be critical in areas that miss moisture the next three days, said Allen Motew, a meteorologist for QT Weather Inc in Chicago. Crop yield-potential is falling after two months of dry weather, based on a vegetative health index that uses government satellite data, Motew said.
“A strong weekend storm is on the way, but the location and speed of this system remains in big question, and so do the crop yields,” Motew said. “The consensus is for hot and dry weather to return next week.”
Corn is the biggest U.S. crop, valued at $48.6 billion in 2009, followed by soybeans at $31.8 billion, government data show.