Soybeans Increase as Argentine Farmers Plan Rally on Export Tax

By Jae Hur

Feb. 19 (Bloomberg) -- Soybeans rallied for the first time in seven sessions on speculation farmers in Argentina may strike in protest against export taxes and quotas, helping boost sales of U.S. supplies. Corn was little changed, while wheat gained.

Argentine farm groups said yesterday they will hold a rally in Cordoba province on Feb. 20 after the government failed to renew negotiations over the taxes and quotas. Growers last year withheld their harvests and blocked highways during a four-month protest which caused food shortages in Buenos Aires.

“The Argentine news has lent support for soybeans and corn,” said Toshimitsu Kawanabe, an analyst at Central Shoji Co. in Tokyo. The grains market also gained on a technical rebound, he said. Argentina is the world’s second-largest corn exporter and third-biggest soybean supplier.

Soybeans for May delivery rose as much as 0.8 percent to $8.9375 a bushel in Chicago electronic trading and were at $8.8875 by 2:42 p.m. Singapore time. The futures lost 2 percent yesterday after touching $8.8425, the lowest for a most-active contract since Dec. 23. Prices reached a record $16.3675 in July.

Corn for March delivery rose 0.25 cent to $3.495 a bushel after yesterday touching $3.46, the lowest since Dec. 12. Futures reached an all-time high of $7.9925 on June 27.

Argentina said a drought will reduce this year’s corn harvest by as much as 43 percent as farmers collect what may be the smallest crop in 13 years.

Soil Moisture

A lack of soil moisture during plant development will result in output of 12.5 million metric tons to 13.8 million tons, the Agriculture Secretariat said yesterday. A crop at the lower end of the range would be the smallest since 1996, government data show. Last year, farmers collected 22 million tons.

Farmers in Argentina planted soybeans on 17 million hectares (42 million acres), the secretariat said. The government had forecast 16.5 million hectares on Jan. 21.

China will buy 10 million tons of corn domestically for temporary stockpiles. China Grain Reserves Corp. will be responsible for the purchases, which will be carried out by the end of April, the State Administration of Grain said today.

Wheat for May delivery advanced as much as 0.9 percent to $5.275 a bushel and traded at $5.2575 by 2:44 p.m. Singapore time. The contract touched $5.22 yesterday, the lowest since Dec. 16. Prices reached a record in February 2008.

Japan bought 117,000 tons of milling wheat, including 75,000 tons from the U.S., for April shipment at a tender today and South Korea plans to buy 22,100 tons of U.S. milling wheat.

The wheat market was supported by strong demand from Asia and the Middle East, including Syria and Iraq, Kawanabe said.

China said the winter wheat growing area suffering from the worst drought in five decades shrank further as irrigation, rain and snowfalls helped relieve parched land in the past few days.

The drought-affected wheat area in the eight main provinces shrank to 56.7 million mu (3.8 million hectares) today, down from 153.3 million mu at the peak on Feb. 7, the Office of State Flood Control and Drought Relief Headquarters said today.

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