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Chicago soybean rebounds on weather worries, despite stronger dollar

01 December 2010 00:43 (UTC +04:00)

Baku-APA. Chicago soybean futures prices ended a two-session losing streak on Tuesday as continuous dryness in parts of Argentina deepened investors’ worries over quality issue of local crops, APA reports quoting Xinhua News Agency.

Corn dropped the most in a week on end of month liquidation as the U.S. dollar extended gains, and wheat prices remained unchanged.

The most active corn contract for March delivery lost 9.25 cents, or 1.7 percent, to 5.44 dollars per bushel. March wheat futures were unchanged at 6.905 dollars a bushel. January soybean rose 8 cents, or 0.6 percent, to 12.43 dollars per bushel.

Traders noted that corn and soybean crops in Brazil and Argentina may be much smaller than the forecast by the USDA since dry weather delayed planting. Timely rain fell in parts of Brazil’ s drought-stricken soybean growing area over the weekend, but more moisture is badly needed in most parts of Argentina’s soybean growing area.

Traders also noted that soybean futures shook off early weakness and managed a rally in the face of a stronger greenback on Tuesday, as the persistent dryness in Argentina, the third- biggest soybean producer, delayed soybean planting, thus increasing the chances of lower yields.

"People in South America and traders who are trading soybeans are starting to keep an eye out on that weather pattern La Nina, out in the southern Atlantic. What traders are watching for is we’ re not quite there yet, but in the next 2-3 weeks, if you don’t see some significant moisture through Brazil and the rest of South America, then we may turn into a weather market there too. So, we’ ll be watching the weather closely there," said Tres Knippa, the Principal of Lotus Brokerage.

A trader mentioned that the corn market was hammered by a stronger dollar, as well as an end-of-month fund-selling.

"The funds are holders of massive long position, as the market works lower I think we would see lots of those funds come out," Knippa explained.