US soya drops, wheat rises

US soyabean futures fell 0.7 percent on Wednesday, retreating from a more than one-week high hit in the previous session, as it was weighed by a strong dollar and expectations of a bumper harvest in South America. Corn futures also edged lower, while wheat rose half a percent on support from fund buying.
"I think soyabeans will come under pressure because of favourable weather in South America... they are expecting big production," said Kazuhiko Saito, chief commodities analyst at Fujitomi Co in Tokyo. "The dollar is also very strong against the euro and the Japanese yen, so that is additional pressure on soyabeans."
The dollar rose to its highest level in two months against the yen on Wednesday, led by buying on last-minute commercial needs before the end of the year. The dollar index, a gauge of its value against six major currencies, gained 0.3 percent. A strong dollar makes US commodities less attractive for overseas buyers.
Favourable weather and higher areas under soyabeans in Brazil and Argentina have brightened prospects of bumper production in South America. Brazilian farmers have made an early start to gathering an expected bumper 2009/10 soyabean crop whose development has been helped by above-average rains. Argentina's 2009/10 soyabean harvest is set to come in at a record 50.8 million tonnes due to the biggest ever sowing area, the Rosario grains exchange said in estimates issued on December 22.
Chicago Board of Trade soyabeans for January delivery were down 7 cents at $10.31 a bushel by 0320 GMT. March wheat rose 2 cents to $5.43 a bushel and corn for March delivery lost 1-1/2 cents at $4.15-1/2 a bushel. Analysts said corn prices will likely to be supported by investment funds buying grain futures next year, while soyabeans come under pressure from large supplies.
"Corn is being supported by high ethanol demand in the United States. Also, index funds are expected to start buying corn next year," Saito said. "But for soyabeans our target price next year for March contract is below $10 a bushel." The market is also eyeing weather in the US Midwest corn belt, where snow is covering around 500 million to 600 million bushels of unharvested corn. The central United States, much of it under a blanket of snow from the previous week's winter storm, will face bitterly cold temperatures this week, a forecaster said.