Corn and soya advance

Grains began the new year on a strong note on Tuesday, with corn and soyabeans advancing on worries about hot, dry crop weather in Argentina slashing production, coupled with a renewed appetite for risk in global financial markets.
The rally coincided with gains across commodities markets as the dollar slumped against the euro. US crude oil futures soared more than 4 percent as tension between Iran and the United States stirred fear of a possible disruption to oil supplies from the Middle East.
US equity markets rose after data showed US manufacturing activity and construction spending picked up, signalling that the economic recovery was gaining steam. Looking to put cash to work after a tough year in 2011, investors were also encouraged by data from China and Germany suggesting improvement in those major economies.
Grains and oilseeds had a mixed performance in 2011, with corn rising 2.8 percent for the year, while wheat fell 17.8 percent and soyabeans slid 13.7 percent. All three markets opened sharply higher at the Chicago Board of Trade on Tuesday, notching multi-week highs after the long New Year's Day weekend. But the early gains were eroded by profit-taking and a flurry of cash grain sales by farmers seizing on higher prices at the start of a new tax year.
"We started seeing some light profit-taking. We've had strong gains off the mid-December low, and I think people are taking a little money off the board," said Shawn McCambridge, grains analyst with Jefferies Bache. "We tend to get a little (farmer) selling coming into the first of the year, getting into the new tax year and generating some cash to cover operating costs," McCambridge said.
CBOT corn posted the day's biggest percentage gains as forecasts called for continued dry weather in Argentina, the world's No 2 corn exporter and No 3 supplier of soyabeans. Corn for March delivery settled up 12 cents, or 1.9 percent, at $6.58-1/2 per bushel after touching $6.64-1/4, the highest spot price since November 9. Most-active March soyabeans ended up 19-3/4 cents, or 1.6 percent, at $12.27-1/2 per bushel. March wheat ended up 4-1/4 cents, or 0.7 percent, at $6.57 a bushel after trading as high as $6.70-3/4, the highest spot wheat price since September 21.