December 13, 2010

CBOT soy fall as rain seen likely to aid Brazilian, Argentinean crops

Soy futures declined, heading for the first weekly drop after three weeks, on speculation that rain will enhance crop progress in Brazil and bring back soil moisture in Argentina.

Parts of Brazil, the biggest grower and exporter after the US, received as much as 1.9 inches (4.8 centimeters) of rain in the past 24 hours, and more is expected in the next two days, said World Weather Inc.

In Argentina, the third-biggest exporter, 70% of the fields will get 0.6 inch to three inches of precipitation over the next three days, reducing crop stress, the private forecaster said.

"Rain this weekend will be very timely. There is little incentive to hold long positions without a threat to South American crops," said Don Roose, the president of US Commodities Inc. in West Des Moines, Iowa.

Soy for January delivery fell US$0.11, or 0.9%, to US$12.705 a bushel at 10:17 a.m. on the CBOT. A close at that price would be a weekly drop of 2.3%. Soy touched US$13.485 on Nov. 12, the highest since August 2009, as Chinese demand surged on concerns that dry weather would hurt South American crops.

Soy is the second-biggest US crop, valued at US$31.8 billion last year.