Dry weather in South America boosts soy futures
Soy futures increased as hot, dry weather threatened newly planted crops in Brazil and Argentina, the two largest soy producers after the US.
Soy futures for January delivery rose 3 cents or 0.4 percent to US$8.30 per bushel on the CBOT.
Much of northern Argentina and southern Brazil will have unusually dry weather for the next nine days, increasing stress on crops that missed rains last week, according to Mike Tannura, a meteorologist for T-Storm Weather in Chicago.
Tannura said temperatures will reach 38 degrees Celsius (100 Fahrenheit) by December 6, depleting soil moisture reserves.
The dry weather forecasts and heat are becoming market factors, but there is still time for a change in the pattern before pods begin to set and fill in beans in January and February, said Chad Henderson, a market analyst for Prime Ag Consultants Inc.
Argentina's soy crop may not achieve its record level forecast for next year due to the reduced usage of fertilisers, said Hugo Biolcati, president of Argentina's Rural Society.
While soy acreage has increased, the crop yield will be held back as less technology was used, said Biolcati.
A smaller-than-expected crop from Argentina, the world's third-largest soy producer, may lead to lower global stocks.
Brazil has also forecast its soy production next year to fall to 58.4 - 59.3 million tonnes, down from 60 million tonnes this year, due to reduced financing and fertiliser use.
Soy also rose and corn's earlier losses were erased on speculation that US farmers are withholding newly harvested supplies after prices fell in the past five months, said Henderson.
Discount for cash corn in Iowa compared with CBOT futures has widened to 47.75 cents per bushel from 31.5 cents on November 25, reducing incentives for farmers to sell their produce, Henderson said.
Cash soy in Iowa is down 50 percent from July.
Henderson said farmers will not sell until prices improve, though they have lowered their sights due to concerns that the global recession will slow demand.