SINGAPORE/PARIS (Reuters) - U.S. soy and corn futures rallied on Monday as dry weather in agricultural powerhouses Brazil and Argentina raised concerns over supplies in the new year, overriding worries about the global economy and Europe’s debt crisis.
Wheat also rose quite sharply, despite a picture of plentiful world supplies and a strengthening of the dollar following news of North Korean leader Kim Jong-il’s death.India said it was on track to produce a new record wheat crop in 2012 after harvesting 85.93 million tonnes this year.
Fields in parts of Brazil, which is set to supplant the United States as the world’s top soybean exporter next year, and in Argentina, the No. 3 shipper, need more rain, while rising temperatures forecast for this week could stress crops.
“There is support from dry weather in South America, and there could be more upside for corn because of the tight global supplies,” said Lynette Tan, an analyst with Phillip Futures in Singapore.
“We are more bearish on wheat because of ample supplies, so there could be more downside for wheat.”
Chicago Board of Trade January soybeans rose 1.5 percent to $11.46-3/4 a bushel by 1250 GMT, while March corn gained 2.2 percent to $5.96 a bushel. March wheat erased earlier losses to gain 1.8 percent at $5.94-3/4 a bushel. Any decline in corn and soybean production in Brazil and Argentina could benefit exporters in the United States, who have been hampered by relatively high prices.
Ukraine has been undercutting U.S. corn exports, while the prospects of a bumper crop before the current weather concerns had put importers of U.S. soybeans on hold.
Agricultural meteorologist Drew Lerner, president of private forecaster World Weather Inc, said it would be warmer than normal in Argentina early this week, with temperatures rising into the 80s and 90s Fahrenheit.
The dry weather that will reduce soybean yields from last year’s record in Brazil’s southernmost state is hitting corn fields in the same areas even harder, crop specialists said.
Still, there was a bearish influence from outside markets.
Asian stocks fell, with Korean shares down as much as 5 percent, U.S. index futures extended losses and the dollar rose after North Korean television reported that Kim Jong-il had died at the weekend, which sparked immediate concern over who is in control of the reclusive state and its nuclear programme.
In Europe, stocks in defensive sectors such as food and beverage led a small rise in equity markets. For the wheat market, prospects of higher winter crop production in the United States remained bearish.
Memphis-based analytical firm Informa Economics on Friday pegged 2012 U.S. wheat acres at 57.065 million, above the November forecast for 57.0 million.
It forecast U.S. corn acreage at 94.389 million, the most since 1944 and above the firm’s outlook in November for 94.0 million acres, trade sources said.
The area is well above the U.S. Department of Agriculture’s (USDA) corn plantings number of 91.9 million for 2011.
It trimmed its outlook for the 2012 U.S. soybean area to 74.608 million acres from the November outlook for 76.1 million.
The USDA said farmers planted 75.0 million acres of soybeans in 2011.
China’s State Grain Administration has confirmed it has been stockpiling corn from farmers in northeastern provinces from Dec. 14 to shore up domestic prices and refill depleted reserves.
The stockpiling, which will last until the end of April next year, may halt imports by the world’s second-largest consumer during this period after the government bought more than 3 million tonnes of U.S. corn this year to help refill reserves, analysts said.
In Europe, the benchmark March milling wheat contract in Paris rose 1.1 percent to 181 euros, following Chicago’s strong lead. Trade was subdued, though, with cash markets closed for the year-end holidays.
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