Soybeans shot up nearly 20 cents Wednesday as traders weighed reports of heavy rains in Argentina and the U.S. dollar lost strength.
January soybeans jumped 19½ cents to $10.06 ¼, while March corn rose 4 cents to $3.59 ¾. Chicago March wheat also soared 12 cents to $4.18 2/5 amid reports of damage to winter wheat crops in key U.S. wheat-growing states.
“Heavy rains in Argentina may reduce planted soybeans acres,” says DuWayne Bosse of Bolt Marketing in Britton, S.D. “The trade is talking about Argentina soybean production down as much as 2 to 3 MMT due to fewer planted acres.”
On the other hand, Brazil’s crop could be 3 MMT higher than current estimates, he notes.
However, even though Brazil’s early soybean crop is doing well, “it’s possible that the funds want to put some weather premium back into the soybean market until all the beans are planted in Argentina or rains fall in the dry areas of northeastern Brazil,” he says.
Another analyst, Paul Georgy, CEO of Allendale, in McHenry, Ill., holds a similar view.
“South American weather remains a focus for traders as some parts of Argentina got up to 10 inches of rain over the past week. Concerns are that farmers will be unable to finish planting corn and soybeans,” he writes in his blog Wake Up Call.
Wheat prices also rallied Wednesday amid USDA reports revealing more damage form dry, cold weather to winter wheat in key states.
“Oklahoma’s good to excellent rating dropped from 53% in November to 25% in December. Kansas dropped from 52% to 44%. Colorado dropped from 47% to 40%,” notes Bosse. Nebraska’s rating also dropped from 53% to 46%, according to USDA’s National Agricultural Statistics Service.
“Today’s upward move was likely funds liquidating short wheat contracts,” Bosse says. “I don’t think anyone in the trade really believes the winter wheat crop is dead, but the funds are holding a massive short position and likely wouldn’t want to be short just in case we do indeed have a problem with the U.S. crop this year."