US corn and wheat futures fell to their lowest level in nearly a month on Wednesday in anticipation of much-needed rain during the weekend providing relief to parched crops in Argentina. The weather-related weakness in corn spilled over to wheat, which also was under pressure from plentiful global stocks and light demand for US supplies on the export market.
Soyabean futures fell in line with wheat and corn early but found support around the 30-day and 50-day moving averages and rallied late in the day to close unchanged from Tuesday. Some talk of Chinese demand for US soya also helped bolster soyabean prices. The latest weather forecast boosted expectations for rain this weekend in South America, predicting that as much as 1.5 inches (38 millimeters) could fall in Argentina during the weekend.
"It's a little wetter in southern Argentina Saturday through Monday," said Andy Karst, meteorologist with World Weather Inc. "That is probably the biggest change." The forecast reinforced expectations for needed rain that South American farmers hoped would stabilise a crop that already has lost much of its potential due to the dryness.
Chicago Board of Trade March corn futures settled down 10-1/2 cents at $5.93-1/2 a bushel. Prices bottomed at $5.92-1/2 during the session, their lowest since hitting $5.84-1/4 on December 19. CBOT March wheat fell 12-1/2 cents to $5.92-1/4 a bushel, hitting a low of $5.90 during the session. The intraday low was the lowest level since $5.81-3/4 on December 19. CBOT March soyabeans were unchanged at $11.83-1/2 a bushel.
"There is a little bit of selling in anticipation of the rain event coming up (in Argentina)," said Dennis Cajigas, senior market strategist at the Zaner Group LLC. "It may be a little bit of profit-taking ahead of the (storm)." The grains market also remained under pressure from a US Agriculture Department report last week pegging corn and soyabean supplies above expectations and wheat seedings bigger than market estimates.
"We are still kind of digesting the report from last week," said Jason Britt, analyst with Central States Commodities. "We got our curveball. Normally, you are looking at probably three to four days for the trade to get back into balance after they throw you a curveball like that."
The La Nina weather phenomenon, which has been linked to the hot and dry weather in South America this year, has displayed signs of weakening over the past two weeks, Australia's weather bureau said. The drought conditions have caused many crop watchers to lower their estimates of the South American crops beyond the cuts to production the US Agriculture Department made in its monthly supply-and-demand report last week.
Private analyst Michael Cordonnier lowered his forecast of Brazil's 2011/12 soyabean production to 71 million tonnes, down 1 million from his previous estimate. He cut his forecast for the Argentine soya crop by 1 million tonnes to 50 million tonnes. For corn, the closely watched Cordonnier cut 2 million tonnes from his forecast for Argentine production and 1 million tonnes from his forecast for Brazil's crop.
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