(Bloomberg) – Soybeans and corn advanced for the first time in a week on speculation that China will ease monetary policy after the economy expanded at its slowest pace in 10 quarters, potentially boosting demand for raw materials.
China’s gross domestic product rose 8.9 percent in the fourth quarter from a year earlier, the statistics bureau said today. Analysts surveyed by Bloomberg expected 8.7 percent growth. China may ease lending curbs and increase spending to bolster the world’s second-biggest economy, boosting demand for grains and oilseeds, said Gary Mead, an analyst at VM Group.
“This must be a reaction to China’s GDP being about what people thought it would be,” Mead said by phone from London today. “China’s tight monetary policy might be eased and therefore Chinese demand will begin to rise.”
Soybeans for March delivery gained 2.4 percent to $11.8575 a bushel at 9:56 a.m. London time on the Chicago Board of Trade, the first gain since Jan. 9. The most-active contract dropped 3.2 percent last week.
Corn for March delivery rose 1.9 percent to $6.1075 a bushel after slumping 6.8 percent last week. A close at that price would be the biggest gain since Dec. 27. Trading in Chicago was closed yesterday for the Martin Luther King Jr. holiday in the U.S.
Prices also gained as drought caused by La Nina persists inSouth America, threatening to curb global supply further.
Corn and soybean crops in Brazil’s southernmost state ofRio Grande do Sul will be harmed by more dry weather in the next 10 days, weather forecaster Somar Meteorologia said yesterday. In Argentina, the second-largest corn shipper, a heat-wave was forecast over the next two weeks and little rain was expected, said Maximiliano Zavala, a forecaster at the Buenos Aires Cereals Exchange.
Dry Weather
Corn output in Argentina will probably drop to 21.4 million metric tons in the current growing season, “significantly”lower than expected, after dry weather damaged the crop, the Rosario Cereals Exchange said Jan. 13. That’s about a third less than the 30 million tons expected by Argentine corn group Maizar in November, before the drought began.
“There’s a question over the size of the South American crop,” Mead said. “It’s still early and it’s not ruined but some damage will be done.”
Wheat for March delivery rose 1.5 percent to $6.11 a bushel after losing 3.6 percent last week. The price is down 6.4 percent this year.
To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net, or Tony C. Dreibus in London at tdreibus@bloomberg.net.
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.
