GRAINS-US corn drops on Argentine rain, drags wheat lower

Thu Jan 19, 2012 1:29am IST

* Corn falls on relief for parched Argentine crops
    * Wheat follows corn to 1-month low, ample supplies weigh
    * Soybeans buck downward trend on China demand talk

 (Rewrites, updates with closing prices, adds new analyst quote)	
    By Mark Weinraub	
    CHICAGO, Jan 18 (Reuters) - U.S. 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 U.S. supplies on the export
market. 	
    Soybean 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 U.S. soy also helped bolster
soybean 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 stabilize 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 Dec. 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 Dec. 19. 	
    CBOT March soybeans 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 U.S.
Agriculture Department report last week pegging corn and soybean
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 U.S. Agriculture Department made in its
monthly supply-and-demand report last week. 
    Private analyst Michael Cordonnier lowered his forecast of
Brazil's 2011/12 soybean production to 71 million tonnes, down 1
million from his previous estimate. He cut his forecast for the
Argentine soy 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.
 	
 Prices at 1:40 p.m. CST (1940 GMT)      
                              LAST      NET    PCT     YTD
                                        CHG    CHG     CHG
 CBOT corn                  604.00   -11.00  -1.8%   -6.6%
 CBOT soy                  1183.50    -1.50  -0.1%   -1.3%
 CBOT meal                  310.50     1.20   0.4%    0.4%
 CBOT soyoil                 50.77    -0.37  -0.7%   -2.5%
 CBOT wheat                 604.75   -12.25  -2.0%   -7.4%
 CBOT rice                 1458.00   -22.50  -1.5%   -0.2%
 EU wheat                   197.50    -2.50  -1.3%   -2.5%
 
 US crude                   100.65    -0.06  -0.1%    1.8%
 Dow Jones                  12,546       64   0.5%    2.7%
 Gold                      1657.90     6.20   0.4%    6.0%
 Euro/dollar                1.2846   0.0111   0.9%   -0.8%
 Dollar Index              80.5720  -0.6100  -0.8%    0.5%
 Baltic Freight                926      -48  -4.9%  -46.7%
 	
 (Reporting by Mark Weinraub; Editing by Dale Hudson and Lisa
Shumaker)
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