Corn, Soybeans Decline as Rain May Improve South American Crops

By Jae Hur

Jan. 29 (Bloomberg) -- Corn and soybeans fell on speculation that forecast rain in South America may improve crops affected by drought in the past month. Wheat also dropped.

Before today, corn fell 1.5 percent this week and soybeans 2.6 percent, with both prices touching the lowest in almost two weeks. Brazil and Argentina are the biggest exporters of corn and soybeans after the U.S.

“The market was under pressure from easing dry weather concern for crops in Argentina and Brazil,” Toshimitsu Kawanabe, an analyst at Central Shoji Co. in Tokyo, said today. “With few fresh fundamental developments, people are watching demand for soybeans after the Chinese New Year holiday.” Markets in China are closed this week for the vacation.

Corn for March delivery was down 0.9 percent at $3.8125 a bushel at 2:11 p.m. in Singapore after trading between $3.81 and $3.8425. The contract gained 1.9 percent yesterday on speculation President Barack Obama’s stimulus plan will stoke economic growth and demand for grain. Prices have fallen 52 percent from a record $7.9925 in June.

Soybeans for March delivery fell 6 cents, or 0.6 percent, to $9.765 a bushel after trading as low as $9.76. The most-active contract is down 40 percent from an all-time high of $16.3675 on July 3.

Rain Forecast

About 10 percent of Argentina’s growing region will receive up to 2 inches (5.3 centimeters) of rain in the next seven days, providing limited drought relief, Allen Motew, director of meteorology for QT Information Systems in Chicago, said yesterday. Reduced humidity and wind currents led to lower rain forecasts for the next two weeks, Motew said in a note to clients.

The U.S. House of Representatives passed Obama’s proposed $819 billion economic stimulus package yesterday. The plan is aimed at lifting the economy out of a recession through tax cuts and $604 billion in spending.

The 244-188 vote sends the measure to the Senate where Republicans, who want more tax cuts and less spending, will have more power to demand changes. Senate Democrats also are calling for alterations to the plan.

The MSCI Asia Pacific Index added as much as 1.6 percent to 84.85, gaining for a third day. Crude oil for March delivery fell 1.3 percent at $41.60 a barrel after rising 1.4 percent yesterday. The dollar rose 0.5 percent against the euro to $1.3102.

Meantime, South Korea’s Nonghyup Feed Inc. bought 110,000 metric tons of corn for feed production yesterday, according to two industry executives who participated in the tender. Cargill Inc. sold the grain at $197.70 a ton on a cost and freight basis for April arrival, said the executives, who asked not to be identified because the results are confidential.

Wheat for March delivery was down 0.7 percent at $5.9125 a bushel at 2:10 p.m. Singapore time after gaining 1.8 percent yesterday. Prices have tumbled 56 percent from a record $13.495 on Feb. 27.

To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net