Soybeans, Corn Gain on South American Crops; Wheat Rises

Soybeans rose to a three-week high and corn extended the longest rally in a year on speculation that warmer, drier weather may hurt crops in South America, increasing demand for U.S. supplies. Wheat also advanced.

Soil moisture in central Argentina, Paraguay and southern Brazil will decline during the next seven days with little rain expected in the following week, World Weather Inc. in Overland Park, Kansas, said in a report. Frequent precipitation in northern Brazil into February will slow soybean harvesting, the company said.

“The forecast is starting to look more threatening for the crops in South America,” Mark Schultz, the chief analyst at Northstar Commodity Investment Co. in Minneapolis, said in a telephone interview. “We are capping crop potential, and yields will start to decline in February if the forecast verifies.”

Soybean futures for March delivery rose 1.6 percent to close at $14.365 a bushel at 2 p.m. on the Chicago Board of Trade, after reaching $14.39, the highest since Dec. 26. Prices are up 4.6 percent this week and 24 percent higher than a year ago.

Corn futures for March delivery rose 0.1 percent to $7.3125 a bushel on the CBOT, after touching $7.35, the highest since Dec. 10. The price has climbed 7.5 percent over eight sessions, the longest rally since December 2011.

Smaller Inventories

Soybean and corn inventories on Dec. 1 in the U.S., the world’s largest grower and exporter last year, were the lowest for that date in nine years, the U.S. Department of Agriculture said on Jan. 11. Almost 42 percent of the contiguous U.S. was in severe to exceptional drought as of Jan. 8, government data show. That’s more than double for the date a year earlier, before the worst drought since the 1930s cut combined output of corn and soybeans by the most since 1996.

“U.S. supplies are tight,” Arlan Suderman, the senior market analyst for Peoria, Illinois-based Water Street Solutions Inc., said in a telephone interview. “The biggest factor is the forecast for continued dry weather increasing drought conditions in the Midwest.”

Wheat futures for March delivery gained 0.3 percent to $7.85 a bushel in Chicago, capping the first four-day gain Nov. 28, after the USDA said farmers planted less winter grain than forecast by analysts.

Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show. Wheat is the fourth-largest at $14.4 billion, behind hay.

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