REFILE-GRAINS-Dryness threatens Argentine crops, lifts prices

Mon Jan 28, 2013 4:17pm EST

Related Topics

* Dry weather threatens corn, soy in Argentina
    * Exporters sell U.S. soybeans to top importer China
    * Wheat futures pull back after rising on Friday

    By Tom Polansek
    CHICAGO, Jan 28 (Reuters) - U.S. grain and soybean futures
edged higher on Monday as traders worried dry weather will trim
output in Argentina, the world's top exporter of soy products
and second-largest corn supplier.
    All eyes are on weather models as Argentina and Brazil must
produce large crops to meet strong demand for soybeans from top
importer China.
    Traders broadly expect large harvests in South America in
the coming months, but every twist in the weather is being
scrutinised amid tight global supplies. 
    After more than a month of almost unrelenting Southern
Hemisphere summer sunshine, corn and soy fields need new
moisture to ensure their healthy development. 
    "The rains haven't come yet," said Mike Krueger, president
of brokerage The Money Farm, which counts farmers in Argentina
among its clients.
    Corn in Argentina will endure "a lot of pretty serious
stress" from dryness in the next three days before rain is
expected to fall, said Drew Lerner, president of World Weather
Inc. Soybeans also will suffer, he said, adding that crop
conditions will worsen if the weather stays dry in February.
    At the Chicago Board of Trade, March soybeans rose 0.5
percent to $14.47-3/4 a bushel, and March corn jumped 1.2
percent to $7.29-1/4 a bushel. March wheat gained 0.4
percent at $7.79-1/4 a bushel.

    BRAZILIAN BOTTLENECK
    Soybean futures were underpinned by firm cash prices and
talk that China will need to source higher volumes from the
United States in the near term as infrastructure bottlenecks
delay shipments from Brazil.
    Brazil is forecast to surpass the United States as the No. 1
exporter and producer of soybeans this season, with a record
85-million-tonne crop that has already begun to be harvested in
top soy-growing state Mato Grosso. 
    Big trading houses are dispatching an armada of ships to
Brazil, hoping for a good spot in line to load up the record
crop.
    Brazil's crop is 30 percent bigger than last year's, which
is good news for big importers like China. However, the South
American farming giant has added no new capacity to its ports.
 
    Private exporters struck deals to sell 220,000 tonnes of
U.S. soybeans to China for delivery in the next marketing year,
the U.S. Department of Agriculture said on Monday. 
    The USDA said separately that 40.7 million bushels of U.S.
soybeans were inspected for export last week, within
expectations for 39 million to 43 million bushels. 
 
    Weekly U.S. export inspections were 22.3 million for wheat,
above expectations for 16 million to 20 million, and 21.1
million bushels for corn, above expectations of 8 million to 11
million.

    WHEAT EXTENDS GAINS
    Wheat futures extended gains after rising 1 percent on
Friday on better-than-expected U.S. exports last week and
concerns about dry weather in the U.S. Plains.
    Still, large overseas harvests are expected to compensate
for lagging production in the United States.
    The front-month CBOT wheat contract is expected to end
2013 at $6.80 a bushel, down from the closing price of $7.78 at
the end of 2012, according to the average estimate in a Reuters
survey of analysts and traders. 
    Analysts see Chicago corn prices falling by 22 percent to
under $5.50 per bushel by year's end and soybeans by 17 percent
to $11.83 per bushel as world supplies are projected to recover.
 
    
 Prices at 2:54 p.m. CST (2054 GMT)      
                              LAST      NET    PCT     YTD
                                        CHG    CHG     CHG
 CBOT corn                  729.25     8.50   1.2%    4.4%
 CBOT soy                  1447.75     6.75   0.5%    2.0%
 CBOT meal                  420.30     3.90   0.9%   -0.1%
 CBOT soyoil                 51.89    -0.21  -0.4%    5.6%
 CBOT wheat                 779.25     2.75   0.4%    0.2%
 CBOT rice                 1535.00   -13.00  -0.8%    3.3%
 EU wheat                   247.00    -0.25  -0.1%   -1.3%
 
 US crude                    96.47     0.59   0.6%    5.1%
 Dow Jones                  13,893       -3   0.0%    6.0%
 Gold                      1655.09    -3.40  -0.2%   -1.1%
 Euro/dollar                1.3456  -0.0009  -0.1%    2.0%
 Dollar Index              79.7850   0.0370   0.1%    0.0%
 Baltic Freight                792       -6  -0.8%   13.3%
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