December 30, 2011

Forecaster Somar said on Thursday (Dec 29) that Mato Grosso and areas in further east will experience heavy rains in the next five days with light showers in the far southern state of Rio Grande do Sul.

Dryness in the southernmost state of the world's No. two soy producer that continues uninterrupted down through the key soy areas in No. three producer Argentina, has given support to soy futures in recent days, with no sign of imminent relief.

Chicago January soy futures were trading down 0.8% early on Thursday at US$11.88 per bushel, after hitting a six-week high on Tuesday on expectations that dryness will continue long enough to put a severe dent in output.

Chicago March corn was trading slightly firmer on Thursday at US$6.42 per bushel. Brazil's top corn state Parana, would see little rain according to Somar's five-day forecast except in the west which should see heavy rain.

Argentina's National Meteorological Service (SMN) forecast continued dryness and high temperatures in the soy and corn belt, with the only rain due to fall on the edges of the key farming regions.

Rio Grande do Sul, Brazil's No. three soy state, should get rains varying between 5-15 millimetres (0.2-0.6 inches) by the weekend, bringing minimal relief to a state which has received 35-76% less rain than average so far in December.

The state plants later than most others, heightening the risk that dryness could cause germination to fail in newly-seeded fields. Producers would still have the option of re-sowing however.

Rains are forecast to be heavier in Mato Grosso, helping the now-maturing plants there, but farmers will be anxious for dryness in the coming weeks as they prepare to harvest the oilseed there.

The central Brazilian state of Goias was expected to receive the most rain in the next five days, with 59 millimetres due next Monday alone.