Soybeans Advance as Hot Weather May Hurt South American Crops

(Businessweek) – Dec. 16 (Bloomberg) — Soybeans gained for a second day on concern that dry weather in parts of South America may hurt crops, curbing global supply.

Soybeans for March delivery climbed 0.5 percent to $11.265 a bushel on the Chicago Board of Trade at 2:13 p.m. Singapore time. Futures have gained 1.8 percent this week and are set for a 20 percent decline this year.

Argentina’s soybean, corn and wheat growing areas will have hot weather ahead of a cold front expected in the middle of next week, Telvent DTN Inc. said yesterday. Soybean and corn areas in the southern part of Brazil may turn hotter early next week and parts of Rio Grande do Sul and southern Parana states have had below normal rainfall so far this month, it said.

Soybeans “were supported by continued concerns about patchy dryness in South America’s growing regions,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, said in a report today.

Rio Grande do Sul, which produces about 14 percent of Brazil’s soybeans and 10 percent of its corn, had six weeks of dry weather, the Brazilian government said Dec. 12. Brazil is set to be the world’s largest soybean shipper in the 2011-2012 season, according to the U.S. Department of Agriculture.

Wheat for March delivery climbed 0.2 percent to $5.8025 a bushel, trimming the weekly loss to 2.6 percent. Futures earlier fell to $5.7725 a bushel equaling the lowest price in more than 16 months reached yesterday. Futures are set for a 27 percent slump this year.

Export Sales

Export sales of wheat from the U.S., the largest shipper, fell 25 percent to 318,357 metric tons in the week ended Dec. 8 from a week earlier, the USDA said yesterday. The harvest in Argentina, South America’s largest exporter, will likely reach 13.6 million tons, more than the 13 million tons forecast a week ago, the Buenos Aires Cereals Exchange said yesterday.

“The U.S. wheat markets remain firmly entrenched in their 10-month downtrend,” Commonwealth Bank’s Mathews said, citing the impact of higher Argentine supply on U.S. sales.

Canada’s wheat production may total 25.3 million tons in the year that began Aug. 1, higher than the 24.2 million tons estimated last month and above last year’s output of 23.2 million tons, the Agriculture Ministry said.

That matches the USDA estimate on Dec. 9 which ranks Canada as the fourth-largest shipper this season. The agency predicted that the global output will rise to a record, taking stockpiles to a 12-year high of 208.5 million tons.

Corn for delivery in March gained 0.2 percent to $5.8025 a bushel, set for a 2.4 percent loss this week. The commodity has declined 8 percent this year, heading for the first annual loss in three years.

–Editors: Ovais Subhani, Thomas Kutty Abraham

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net