February 24, 2010

Grain prices rise on rainy weather in Brazil, Argentina

Growing concerns that the rainy weather in Brazil and Argentina could damage soy and corn production have boosted grain prices on Monday (Feb 22).

Analyst John Sanow said actual damage will not be known until harvesting and this is more of a rumour situation. He was referring to investors' tendency to react to rumours and reports rather than wait for the actual news.

But with little other news to sway the market, speculation about crop damage can drive trading, he said.

Soy for May delivery rose 14.5 cents to settle at US$9.69 a bushel, while corn jumped 11 cents or 3% to US$3.8275 a bushel. Wheat also rose sharply, gaining 11.25 cents or 2.2% to settle at US$5.1525 a bushel.

Grains have rallied in the past few weeks after plummeting for nearly a month. The sharp decline came after the USDA said there was ample supply of the crops.