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U.S. soy hits seven-week high amid Argentina dryness

Corn, wheat shed earlier gains on low export inspections
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U.S. soybeans rose one per cent on Monday to a seven-week high on steady export demand and as unfavourable weather in South America slowed the harvest in northern Brazil and threatened crops in Argentina.

Corn fell for a second consecutive session on concerns about demand after a government report showed export inspections last week were lighter than anticipated, while wheat prices eased on forecasts for rain in the drought-hit southern Plains.

Sinking crude oil and equities markets and a firmer U.S. dollar added pressure in corn and wheat, offsetting spillover support from the higher soybean market.

Mike Zuzolo, president of Global Commodity Analytics, said that for soybeans, "the fear has been resurrected this morning that not only do we have weather issues in South America, but we're not slowing the demand down here in the United States like we need to. That was exacerbated today by another new sale to China, half of which was old-crop."

The U.S. Department of Agriculture confirmed on Monday private sales of 116,000 tonnes of U.S. soybeans to China, with 58,000 tonnes of it for shipment in the current marketing year, which ends Aug. 31.

The weather in Brazil was mostly favourable for crops, but recent rain trimmed yields and stalled the harvest in parts of the country.

Local Brazilian consultancy AgRural on Monday lowered its soy crop forecast from a month earlier on crop-reducing rains.

Meanwhile, dry conditions remain an issue in Argentina's crop growing areas.

"There will be some rains, but it's still drier than average in Argentina. It continues to draw down soil moisture reserves headed into the critical reproductive stage of development, so that's not good," said Global Weather Monitoring meteorologist John Dee.

Argentina is the world's No. 3 soybean and corn exporter after the U.S. and Brazil. Consumer nations are hoping it can provide ample supplies of both crops to bolster world food stocks.

Chicago Board of Trade (CBOT) March soybeans rose 14-1/2 cents, or one per cent, to $14.88-3/4 per bushel, rising for the sixth time in seven sessions (all figures US$).

Corn, wheat decline

Corn and wheat were higher early, but came under pressure after the U.S. Department of Agriculture reported at midmorning that export inspections of both grains declined last week.

An estimated 5.348 million bushels of corn and 15.206 million bushels of wheat were inspected for export in the week ended Jan. 31, USDA said. That was below trade estimates for inspections of 15 million to 20 million bushels of corn and 20 million to 25 million bushels of wheat.

A sale of U.S. wheat to Egypt in a snap tender over the weekend was encouraging, but traders said the volume, just a single 60,000-tonne cargo, was disappointing.

CBOT March corn shed 1-3/4 cents, or 0.2 per cent, to $7.34-1/4 a bushel. CBOT March wheat dipped 2-3/4 cents, or 0.4 per cent, to $7.62-1/4 a bushel.

Commodity funds sold an estimated net 4,000 corn contracts and 3,000 wheat contracts, but bought a net 5,000 soybean contracts on the day, trade sources said.

-- Karl Plume reports for Reuters from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore, Sybille de La Hamaide in Paris and Sam Nelson in Chicago.


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