Soybeans, Corn Rise as Dry Weather Hurts South American Crops

By Sungwoo Park and Jae Hur

Jan. 16 (Bloomberg) -- Soybean prices advanced for a second day on speculation that demand for U.S. supplies will increase as unusually hot, dry weather threatened to hurt crops in Argentina and Brazil, the world’s biggest exporters after the U.S.

Shippers in the U.S., the largest soybean grower, reported sales of 1.362 million metric tons in the week ended Jan. 8, the most since the week ended Oct. 23, government data showed. Dry Argentine weather in the next 10 days and high temperatures next week will speed soil evaporation, said John Dee, the president of Global Weather Monitoring in Mohawk, Michigan. An earlier dry spell may curb output from Brazil.

“The dry spell in South America drove up soybeans, which in turn led gains in corn and wheat as well,” said Kwon Yong Kyu, a manager at the trading center of HanMag Futures Corp. in Seoul. “Importers are also starting to buy grains as they may reckon price falls have been overdone.”

Soybean futures for March delivery climbed as much as 12.5 cents, or 1.3 percent, to $10.07 a bushel on the Chicago Board of Trade, after rising as much as 5.5 percent yesterday, the biggest since Dec. 8. Futures were at $10.0175 a bushel at 3:30 p.m. Seoul time. Before today, the most-active contract fell 39 percent from a record $16.3675 on July 3.

Brazil’s soybean crop will fall 8.3 percent from last year and corn output will drop 18 percent because of hot, dry weather since November, according to Michael Cordonnier, president of Corn & Soybean Advisor Inc.

Corn for March delivery gained as much as 2.5 percent to $3.745 a bushel and last traded at $3.725. Wheat for March delivery advanced 0.8 percent to $5.73 a bushel.

Wheat Tenders

Egypt agreed to buy 83,000 tons of Russian and U.S. grain at a tender yesterday, the nation’s main state wheat buyer said. Bangladesh plans to import 100,000 metric tons of wheat for delivery in March and April, the country’s Directorate General of Food said yesterday.

The Philippines, Southeast Asia’s second-biggest user of corn, needs to buy at least 300,000 tons this quarter after domestic prices doubled in a month, an industry executive said.

The government may need to import 200,000 tons of yellow corn in March for resale to hog raisers and millers, National Federation of Hog Raisers Inc. Chairman Rene Elaria said. That’s in addition to 100,000 tons of Brazilian corn purchased by millers for delivery this month and next, he said.

In China, the Dalian Commodity Exchange will temporarily raise margin requirements to as much as 8 percent, and the daily trading limits to 6 percent on the days around the week-long Lunar New Year vacation.

Margins for soybeans, soymeal, soybean oil, corn, polyethylene, and palm oil will be raised from the end of trading on Jan. 22, and daily limits from the start of trading on Feb. 2, the exchange said. The exchange will be closed from Jan. 26 to Jan. 30 for the Chinese New Year holidays with trade resuming on Feb. 2.

To contact the reporters on this story: Sungwoo Park in Seoul at spark47@bloomberg.net; Jae Hur in Singapore at jhur1@bloomberg.net