Soy, corn fall as rains hit drought-hit Argentina
Posted by Labels: Argentina, Futures Corn, Futures Soybeans, South America
U.S. soybean futures fell more than 2 percent on Wednesday in their steepest slide in 1-1/2 months as rains in Argentina brought much-needed relief to drought-stressed crops in key production areas of the world’s third-largest exporter of the oilseed, traders said.
Corn also retreated on the welcome precipitation, but declines were shallower than in soy as a larger share of the corn crop may be beyond repair following weeks of hot, dry weather across Argentina, the world’s No. 2 corn supplier.
Wheat slipped on spillover pressure from lower corn and soy, while a firmer U.S. dollar further weighed on grains.
Heat-stressed corn and soy crops in Argentina were receiving a welcome drink of water at mid-week with from 1 to 2 inches of rain expected, locally up to 3-1/2 inches, over nearly 100 percent of the country by the end of the day on Thursday.
“The rains in Argentina were about as expected and it definitely will improve the crop conditions. But another round of dry weather is expected after the rain and we don’t see another rain event until Jan. 21-23,” said Andy Karst, meteorologist for World Weather Inc.
But trade was restrained ahead of the U.S. Department of Agriculture (USDA) crop reports on Thursday which are expected to indicate some South American corn has suffered irreparable damage, analysts said.
Most of Argentina’s corn crop was in the critical, yield-determining pollination phase of development during the hottest, driest weather over the past month. Soybeans, however, could still benefit from timely rains.
“The market has transitioned its point of view about the weather in Argentina as more of a soybean issue now than a corn issue,” said Rich Nelson, analyst with Allendale Inc.
“The rain overnight is fueling ideas that the beans may not be as damaged. But corn pollination was so poor that you’re probably not going to save the crop,” he said.
Chicago Board of Trade March soybeans fell 2.4 percent to $12.02 a bushel by 10:36 a.m. CDT (1636 GMT) in the steepest decline since Nov. 23.
March corn lost 0.8 percent to $6.47 a bushel. CBOT March wheat dropped for the fifth time in six sessions, shedding 0.8 percent to $6.34-1/2 a bushel.
Positioning ahead of Thursday’s eagerly awaited USDA crop reports could lead to choppy trade later in the session, analysts said. The January report, historically, has triggered sharp price moves in futures.
USDA was expected to trim U.S. corn ending stocks to a fresh 16-year low and downgrade corn and soy crops in South America. The government report was also expected to show an increase in U.S. winter wheat plantings to the largest in three years.
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