Soybeans hit 6-week high on possible Argentina drought
U.S. soybean futures climbed to a six-week high on Wednesday with prices underpinned by fears of a drought in major exporter Argentina and new sales to top buyer China.
Corn futures also rose on concerns about crop losses in Argentina, while unfavorable dryness in the U.S. Plains boosted wheat futures.
"The biggest thing is the uncertainty of the South American weather," said Dax Wedemeyer, broker for U.S. Commodities. He said that forecasts show "that things might be trending just a slight bit drier in some areas."
Chicago Board of Trade March soybeans rose 1.8 percent to $14.77-3/4 a bushel by 10:00 a.m. CST (1600 GMT). March wheat rose 0.8 percent to $7.83-1/4 a bushel, while March corn jumped 0.9 percent to $7.36 a bushel.
The global soybean market is counting on huge South American soybean crops in early 2013 to relieve tight world supplies after a drought in the United States in 2012.
Argentina, the world's No. 3 exporter of soybeans after the United States and Brazil, is expected to have a record harvest this season. But crop forecasts depend on February being a lot wetter than January.
Crop forecaster Lanworth on Wednesday lowered its forecast for corn and soybean production in Argentina due to dryness.
German analysts Oil World on Tuesday warned that delays or weather damage to harvests in Argentina and Brazil could push soybean futures up sharply in coming weeks.
Victor Thianpiriya, an agricultural strategist at ANZ, said the market "is getting concerned as supplies of grains and oilseeds are pretty tight,"
Persistent dryness across the U.S. Plains helped support wheat. Conditions for the winter wheat crop worsened in January as the drought in that major production region showed no signs of ending, according to reports by the U.S. Agriculture Department's National Agricultural Statistics Service.
Strong demand from China is keeping pressure on global soy supplies. Private exporters struck deals to sell 175,000 tonnes of U.S. soybeans to China for delivery in the next marketing year, the U.S. Department of Agriculture said on Wednesday.
It was the second sale this week to China that called for delivery during the 2013/14 marketing year, which opens on Sept 1. On Monday, exporters reported the sale of 220,000 tonnes of U.S. soybeans to China for 2013/14 delivery.
The Brazil harvest may not be as large as expected due to heavy rainfall during the past two weeks and drought in frontier agriculture areas of the northeast, according to El Tejar Ltd, the world's largest grain producer.
The farm giant's commercial director for Brazil, Ivan Konig, said in an interview that he expects a harvest of 80 million to 81 million tonnes, undercutting the Brazilian government's official view of 82.7 million tonnes.