January 29, 2013 / 3:17 AM / 5 years ago

GRAINS-Corn eases after rally; Argentine crop concerns support

* Corn dips after last session's 1.2 pct gain
    * Dry weather in Argentina underpins corn, soy
    * Chinese demand in focus as soy supply tightens
    * Wheat down on Ukraine, Canada crop prospects

 (Adds details, quotes)
    By Naveen Thukral
    SINGAPORE, Jan 29 (Reuters) - Chicago corn edged lower on
Tuesday, as the market took a breather after notching its
biggest one-day gain in two weeks in the previous session on
concerns dry weather will reduce production in Argentina amid
tight U.S. supply.
    Wheat fell 0.3 percent, giving up some of Monday's gains as
prospects of higher supplies from Canada and improved weather
outlook in Ukraine weighed on prices.
    Argentine farmers are watching the cloudless Pampas horizon
for signs they might get the rain they need to help replenish
tight world corn and soybean stocks. But weather maps show
little reason for optimism in the world's No. 3 corn and soybean
exporter. 
    After more than a month of almost unrelenting Southern
Hemisphere summer sunshine, crops need moisture to ensure their
healthy development.
    "South American weather remains a focus of the market, it is
too dry in Argentina and too wet in northern Brazil," said Luke
Mathews, a commodities strategist at the Commonwealth Bank of
Australia in a report to clients.
    Chicago Board of Trade March corn fell 0.2 percent to
$7.27-3/4 a bushel by 0222 GMT after climbing 1.2 percent on
Monday, biggest gain since Jan. 14. March wheat lost 0.3
percent to $7.76-3/4 a bushel, while March soybeans gave
up 0.2 percent to $14.44-3/4 a bushel. 
    The soybean market is expecting higher demand from China,
the world's biggest importer, on positive crush margins which
could further tighten U.S. supplies.
    The United States, the world's top soybean exporter, will
have very tight stocks of soybeans for shipment after February
until the next harvest six months later, putting pressure on
South America to meet red-hot demand, said Thomas Mielke, editor
of Hamburg-based Oil World newsletter.
    U.S. soybean stocks are forecast to drop to a nine-year low
by the end of the September/August marketing season as strong
demand for the drought-reduced crop cuts supplies.
    Still, latest forecasts favour Brazil's expected record
soybean crop as they predict rain will move out of the
center-west region to allow the harvest to continue and move to
the south where dry fields need the moisture. 
    Local crop analysts Celeres said Brazil had harvested 3
percent of the crop as of last week, with the bulk of the
harvest coming from the top two producing states of Mato Grosso
and Parana - at 6 percent and 5 percent respectively.
    The wheat market has been underpinned by dry weather hurting
the U.S. winter crop but large harvests in other exporting
nations are expected to compensate for lagging production in the
United States.
    Winter weather is favourable for Ukrainian grain crop, which
could see its yield rise by 20 to 30 percent in 2013, a senior
Ukrainian weather forecaster said. 
    Autumn drought and severe frosts in almost all Ukrainian
regions damaged about 2 million hectares of winter grains sown
for last year's harvest, reducing the wheat crop to 15.76
million tonnes from 22.3 million tonnes in 2010. 
    Canadian farmers will likely plant the biggest wheat crop in
four years this spring as high prices and disappointment with
last year's canola crop drive up its popularity, according to a
Reuters industry poll earlier this month.
    The front-month CBOT wheat contract is expected to end
2013 at $6.80 a bushel, down from the closing price of $7.78 at
the end of 2012, according to an average estimate in a Reuters
survey of analysts and traders. 
    
  Prices at  0222 GMT
  Contract        Last    Change  Pct chg  MA 30   RSI 
  CBOT wheat     776.75    -2.50  -0.32%   870.30   51
  CBOT corn      727.75    -1.50  -0.21%   766.17   59
  CBOT soy      1444.75    -3.00  -0.21%  1578.70   53
  CBOT rice      $15.29   -$0.06  -0.39%   $15.48   54
  WTI crude      $96.67    $0.23  +0.24%   $89.20   75
  Currencies                                                
  Euro/dlr       $1.345   $0.116  +9.45%   
  USD/AUD         1.044   -0.011  -1.03%   
  Most active contracts
  Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight
  RSI 14, exponential
 
 (Editing by Himani Sarkar)

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