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Soybeans, Corn Extend Declines on Rising South American Supplies

Feb. 11 (Bloomberg) -- Soybean futures declined, capping the biggest four-day drop in seven weeks, and corn fell for a seventh consecutive session on speculation that record crops in South America will slow overseas demand for U.S. supplies.

Soybean production in Brazil and Argentina will jump 28 percent to a record 136.5 million metric tons this year and corn will rise 5.9 percent to an all-time high, the U.S. Department of Agriculture said on Feb. 8. Rain during the past three days and more later this week will shrink crop stress to less than a third of Argentina fields from half last week, and precipitation will aid crops in Brazil, Commodity Weather Group LLC said in a report today.

“The South America crops are getting bigger, and rains will add to yield potential this week,” Greg Grow, the director of agribusiness for Archer Financial Services Inc. in Chicago, said in a telephone interview.

Soybean futures for March delivery fell 1.4 percent to close at $14.315 a bushel at 2 p.m. on the Chicago Board of Trade. Prices have tumbled 4.3 percent in four sessions, the biggest decline since Dec. 20, as concern eased that dry weather in Argentina and too much rain in Brazil would limit production gains. Soybeans are down 20 percent from a record $17.89 in September, when drought cut U.S. production for a third straight year.

March corn futures retreated 1 percent to $7.0225 a bushel on the CBOT. The drop capped a seventh straight drop, the longest since June 2010. The most-active contract has slumped 17 percent from the record $8.49 set Aug. 10.

Soybean Stockpiles

Global soybean stockpiles will be 60.1 million tons before the start of this year’s Northern Hemisphere harvest, more than the 59.5 million estimated last month and 8.8 percent larger than a year earlier, the USDA said last week. Corn reserves will be 118.04 million tons, up from 115.99 million predicted last month.

Brazil will top the U.S. as the largest producer and exporter for the first time. Argentina is the biggest shipper of soy-based animal feed and cooking oil.

In the U.S., corn is the biggest crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures 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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