September 2, 2010

CBOT soy advances on dry weather speculation

Soy futures climbed on speculation that dry weather in the US may curb yields.

November-delivery soy advanced as much as 0.4% to US$10.095 a bushel in Chicago before trading at US$10.0775 at 2:29 p.m. Singapore time.

The US soy crop will likely be 3.39 billion bushels, commodity research and brokerage FCStone Group Inc. said in a report. The company lowered its forecast from 3.428 billion bushels the previous month because of hot, dry weather in parts of the Midwest. That compares with Linn Group's estimate of 3.4 billion bushels and the USDA's forecast last month of 3.433 billion.

"There have been fears that yield potential may start to decline because of some excessively warm and dry conditions in parts of the Midwest," Luke Mathews, a commodity strategist at Commonwealth Bank of Australia said. "The market is keenly watching weather forecasts for the US Midwest."

December-delivery corn dropped 0.2% to US$4.46 a bushel in Chicago. Production in the US, the world's largest grower and exporter, will total 13.195 billion bushels, FCStone said, paring its forecast from 13.43 million in August.

That compares with Linn Group's prediction of 13.016 billion bushels and the USDA's 13.365 billion-bushel estimate last month.