Soybeans Head for First Weekly Gain in Four; Corn, Wheat Rise

By Jae Hur

Feb. 6 (Bloomberg) -- Soybeans rose for a third day, headed for a first weekly gain in four, and corn gained as drought hurt the outlook for crops in Latin America. Wheat climbed a second day after China said its harvest has been hit by a lack of rain.

Brazil, the world’s second-biggest exporter of soybeans and third-largest for corn, yesterday cut its outlook for the crops and may revise the estimates again after assessing damage to plants from desiccation in major producing regions.

“This may prompt the U.S. Department of Agriculture to revise its soybean output estimates lower next week,” Takaki Shigemoto, an analyst at Tokyo-based commodity broker Okachi & Co., said today by phone. The USDA will update its supply and demand forecasts on Feb. 10.

Soybeans for March delivery rose 16.5 cents, or 1.7 percent, to $9.965 a bushel in electronic trading on the Chicago Board of Trade. The contract earlier reached $9.98, the highest in almost two weeks. Corn futures gained 1 percent to $3.75 a bushel today and are poised for a fifth weekly decline.

Growers in Brazil will harvest 50.3 metric tons of corn this year, compared with a Jan. 8 forecast of 52.3 million tons and 58.7 million tons produced last year, Brazil’s Agriculture Ministry said yesterday. The soybean forecast was cut to 57.2 million tons from 57.8 million tons estimated last month and 60 million tons harvested in 2008.

The country may cut the forecasts for a third time as it assesses drought damage, Agriculture Minister Reinhold Stephanes said yesterday.

Chinese Drought

“For corn, the upside will be limited as we expect the USDA to raise its forecast for ending stockpiles following a significant drop in ethanol output,” Shigemoto said.

Wheat for March delivery added 1.1 percent to $5.6775 a bushel. Euronext milling wheat futures added 2.25 euros, or 1.5 percent, to 151 euros ($193) in Paris.

China raised its drought emergency alert to level one, the highest class, for the first time. About 155 million mu (10.3 million hectares) of all crops nationwide are affected, according to a statement by the Office of Flood Control and Drought Relief Headquarters.

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