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Soybeans slump to 1-week low on Brazil, Argentina rain

Published 01/30/2012, 06:22 AM
AGRIC
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Investing.com - Soybean futures were down for a second day on Monday, trading at one-week low as near-term forecasts for rain in Brazil and Argentina helped ease concerns over stressed soybean crops in South America’s largest soy producers.

On the Chicago Mercantile Exchange, soybeans futures for March delivery traded at USD12.0738 a bushel during European morning trade, dropping 0.9%.  

It earlier fell by as much as 1.25% to trade at USD12.0412 a bushel, the lowest since January 23.

Soy prices came under pressure after agricultural meteorologists said that hot and dry weather conditions that have plagued major soy-producing regions in Argentina were expected to ease in the coming week, making way for significant rainfall, which will help relieve crop stress.

U.S.-based industry research group R.J. O’Brien & Associates said in a report over the weekend that sufficient rain will fall on at least three-quarters of Argentina’s soybean crop this week.

In addition, rainfall “has helped keep harvest concerns in Mato Grosso from becoming more serious,” the group said, referring to Brazil’s biggest soybean growing state.

Agricultural traders have been paying close attention to weather forecasts in South America in recent weeks to gauge the effects of a La Nina weather pattern on crop yields in countries such as Brazil and Argentina, the world’s second and third largest soybean exporters.

The La Nina weather pattern typically brings heavier rainfall in Asia and drier weather in South America.

Meanwhile, agricultural traders continued to eye developments surrounding talks aimed at restructuring Greek debt.

Earlier Monday, German Finance Minister Wolfgang Schaeuble said in the Wall Street Journal that the euro zone may refuse to grant Greece a fresh bailout unless it convinces Europe that it can fully implement commitments attached to earlier bailout packages.

An agreement is necessary for Greece to secure the next tranche of bailout funds in order to prevent a sovereign debt default.

The euro zone-related concerns boosted demand for the U.S. dollar, which tends to weigh on dollar-denominated agriculture commodity contracts. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.59% to trade at 79.41.

Elsewhere on the Chicago Mercantile Exchange, wheat for March delivery shed 0.6% to trade at USD6.4263 a bushel, while corn for March delivery slumped 0.55% to trade at USD6.3763 a bushel.

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