Soybeans and Corn Drop as South American Rain May Ease Dryness
Soybeans and corn fell for a second day in Chicago on speculation that rain in South America will ease dry conditions threatening supply of the crops.
Dry areas of Argentina and southern Brazil may see rain tomorrow into the weekend, with some showers reaching Rio Grande do Sul state in Brazil and into eastern and northern Argentina, QT Weather said in a report. Brazil and Argentina were the world’s largest exporters of soybeans and corn last season after the U.S., according to the U.S. Department of Agriculture.
“Reports are coming out of South America of much-needed and perhaps even extensive rains,” economist Dennis Gartman said today in his Gartman Letter. “In Brazil, rain is expected over the main soybean-producing regions in the next several days, and this precipitation in Mato Grosso especially will aid the bean crop that was planted there late but can still use moisture.”
Soybeans for delivery in March slid 0.9 percent to $14.235 a bushel at 7:01 a.m. on the Chicago Board of Trade, heading for a fourth decline in five sessions. Corn for the same delivery month dropped 0.6 percent to $7.1625 a bushel and reached $7.1575, the lowest since Jan. 14 for a most-active contract.
Brazil’s corn crop may total 72.5 million metric tons in the year beginning March 1, the USDA’s Foreign Agricultural Service said yesterday in a report on its website. That’s larger than the USDA’s official forecast of 71 million tons.
Corn also declined on concern demand might slow to use the grain for making ethanol, Luke Mathews, a Sydney-based analyst at Commonwealth Bank of Australia, said in a report e-mailed today. U.S. production of the biofuel fell in the week ended Jan. 11 to 784,000 barrels a day, the lowest level since the U.S. Department of Energy’s statistical unit began tracking weekly data in June 2010, the government said last week. The weekly DOE numbers are due for release today, according to the department’s website.
Wheat for delivery in March retreated 0.5 percent to $7.705 a bushel. In Paris, milling wheat for the same delivery month fell 0.9 percent to 249.25 euros ($332.13) a ton on NYSE Liffe.
Brazil, the world’s second-largest wheat importer after Egypt, may step up purchases of North American supplies as its domestic production declines, the USDA’s FAS said. The agency pegged Brazil’s wheat imports at 7.4 million tons, compared with the USDA’s official forecast of 7.5 million tons.
“While Argentina has been Brazil’s primary traditional wheat supplier, analysts are now estimating that in order to meet domestic demand Brazil will need to import 2.5 to 3 million tons of wheat from North America, conservatively estimating 1.5 million tons from the United States,” the FAS said.
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