Soybeans rallied to a six-week high and corn rose for a fifth straight day on speculation that warm, dry weather will erode yields in Argentina, increasing demand for tightening U.S. supplies.
Most fields in Argentina were dry in the past 24 hours, and the main growing region will be warm and dry for another 10 days, T-Storm Weather LLC in Chicago said in a report to clients. Since Dec. 20, Argentina has been drier than last year, when it had a drought, the forecaster said. U.S. inventories of corn and soybeans fell Dec. 1 to the lowest since 2003, after drought cut output for a third straight year.
“The markets are reacting to the potential for smaller crops in Argentina,” David Smoldt, a vice president at INTL FCStone Inc. in West Des Moines, Iowa, said in a telephone interview. “U.S. corn and soybean supplies are extremely tight, and there is no room for additional exports.”
Soybean futures for March delivery rose 1.1 percent to $14.84 a bushel at 10:23 a.m. on the Chicago Board of Trade, after touching $14.865, the highest since Dec. 18. Prices are up 3 percent since Jan. 25, heading for a fourth straight weekly gain.
Corn futures for March delivery advanced 0.5 percent to $7.44 a bushel in Chicago, heading for the longest rally since Jan. 16. Earlier, the grain touched $7.4625, the highest since Dec. 7.
Prices also rose on speculation that China, the world’s biggest consumer of grain, will increase imports to curtail rising domestic prices, Smoldt said. Corn futures on the Dalian Commodity Exchange have gained 7.2 percent since Oct. 1 after harvesting a record crop. That’s equal to $10.08 a bushel, data compiled by Bloomberg shows.
“Importing products that China needs helps to stabilize domestic prices” Chen Xiwen, deputy head of the Central Rural Work Leading Group under the State Council, said at a press conference today.
Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.
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