Corn, Soybeans Drop as Rain May Relieve Crops in South America

By Jae Hur

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

Corn and soybean futures fell for a second day this week, reversing yesterday’s gains. 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 fell 1.6 percent to $3.7825 a bushel in electronic trading on the Chicago Board of Trade. The contract gained 1.9 percent yesterday on speculation President Barack Obama’s stimulus plan will stoke economic growth and demand for grain. Soybeans for March delivery fell 0.7 percent, to $9.7575 a bushel.

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.

Tax Cuts

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 rose 1.5 percent to 84.77, gaining for a third day. The dollar slipped 0.2 percent against the euro to $1.3134.

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 dropped 1.1 percent to $5.89 a bushel, after rising 1.8 percent yesterday. Milling wheat futures trading on Euronext in Paris dropped 1.25 euros, or 0.8 percent, to 150.25 euros at 2:12 p.m. local time.

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