Bloomberg News

Soybeans Advance as Dry Weather Threatens South American Crops

December 16, 2011

Dec. 15 (Bloomberg) -- Soybeans gained on concern that hot and dry weather may hurt crops in Brazil and Argentina, the world’s second- and third-biggest producers after the U.S. Wheat rose, while corn was little changed.

Soybeans for delivery in March advanced 0.5 percent to $11.15 a bushel on the Chicago Board of Trade at 1:12 p.m. in Singapore, paring this year’s decline for futures to 21 percent.

Argentina will have hot weather over the weekend and into early next week, increasing stress to corn and soybean crops, especially around southern Santa Fe province, Telvent DTN Inc. said yesterday. Brazil’s Rio Grande do Sul and southern Parana states have had below normal rainfall so far this month, it said.

“Obviously, the dry weather in South America does have some influence” on prices as it raises the risk that yields may drop, Michael Creed, an agribusiness economist at National Australia Bank Ltd., said by phone from Melbourne.

Global inventories of soybeans will drop to 64.5 million tons before next year’s Northern Hemisphere harvest, from 68.4 million tons a year earlier, the U.S. Department of Agriculture said on Dec. 9. That’s bigger than the 61.85 million tons predicted by the agency in May.

Wheat for March delivery gained as much as 0.5 percent to $5.835 a bushel after plunging yesterday to the lowest intra-day price for a most-active contract since July 21, 2010. It traded at $5.815 a bushel, taking this year’s loss to 27 percent.

Wheat Surplus

The global wheat market will swing from a deficit to a surplus this season as production in 2011-2012 surges to a record, taking stockpiles before next year’s Northern Hemisphere harvest to a 12-year high of 208.5 million tons, the USDA said.

Corn for March delivery was little changed at $5.81 a bushel, taking the loss to 7.6 percent for this year.

Stockpiles of corn worldwide will drop to 127.2 million tons at the end of this season, from 128.3 million tons a year earlier, the USDA said. That’s bigger than the 121.57 million- ton inventory estimate by the agency last month.

While the lingering European debt crisis may continue to cause “wild swings” in commodities including grain, “if you look through that volatility, there’s still demand coming from emerging markets,” Creed said, forecasting wheat may advance to as high as $6.50 a bushel next year, while corn will peak at $6.40 a bushel.

--Editors: Ovais Subhani, Jarrett Banks

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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