Soybeans Drop as Rain May Boost South American Crops; Corn Rises

Soybeans fell on speculation that rain will aid planting in South America, boosting production and reducing demand for U.S. supplies. Corn rose the most in five weeks, while wheat declined.

Rain, warm weather and periods of sunshine during the next two weeks will create favorable conditions for soybean-seed germination and early crop development in Brazil and parts of Argentina, World Weather Inc. said in a report today. Production may rise 6.6 percent to a record 87 million metric tons in Brazil, while output jumps 11 percent in Argentina, Chris Gadd, an analyst at Macquarie Group Ltd., said today.

“Expectations for a record crop in South America are weighing on the soybean market,” Jim Gerlach, the president of A/C Trading Co. in Fowler, Indiana, said in a telephone interview. “Brazil should be in great shape for a fast start, while Argentina will need more frequent rain.”

Soybean futures for delivery in November slipped 0.5 percent to close at $12.67 a bushel at 1:15 p.m. on the Chicago Board of Trade. Yesterday, the most-active contract touched $12.6175, the lowest since Aug. 16.

Corn futures for delivery in December rose 1.5 percent to $4.435 a bushel, the biggest gain since Sept. 6.

‘Price Discount’

The average U.S. cash price dropped 43 percent in the past 12 months to a three-year low as U.S. production is forecast to jump 28 percent to a record this year, data from the Minneapolis Grain Exchange show. Corn is trading at the biggest discount to cash wheat since August 2010.

“Ethanol producers are bidding for corn because they are making money,” Gerlach said. “The price discount is going to boost corn feeding in livestock rations.”

Most data from the U.S. Department of Agriculture, including monthly supply and demand figures, have been suspended amid the partial government shutdown.

“In the absence of data provided by the USDA, the market remains hesitant, while harvest work continues in the U.S. and the yields seem better than expected both in soybeans and corn,” Paris-based Agritel SA wrote in a client report today.

Wheat futures for delivery in December fell 1 percent to close at $6.8575 a bushel on the CBOT, the biggest drop since Sept. 20.

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