HAMBURG: Chicago soybeans and corn were firm on Tuesday, with markets underpinned by concerns about poor weather damaging soybean crops in Argentina.
Wheat drifted down on large global supplies, but falls were limited by worry about damage to the harvest in major exporter Australia.
"Soybeans, corn and wheat are in a weather market with some extra risk premium being priced in especially because of risks in South America, especially to soybean production regions in Argentina," said Graydon Chong, senior commodity analyst with Rabobank.
"Corn is generally following trends in soybeans while wheat is seeing some support from weather risks faced by the Australian crop."
Chicago Board of Trade (CBOT) most-active January soybeans
were up 0.1 percent at $10.00-1/4 a bushel at 1204 GMT, not far from Monday's peak of $10.08-1/2, reached because of a surge in soymeal.
Chicago January soymeal rose 2 percent on Monday and was up 0.2 percent on Tuesday at $338.60 per ton amid the crop worries in top soymeal and soyoil exporter Argentina.
March wheat fell 0.2 percent to $4.34-1/4 a bushel and March corn was up 0.2 percent to $3.54-1/2 a bushel.
Rainfall over the weekend was limited in Argentina and showers were expected to be limited this week, MDA Weather Services said in a note.
"Soybeans remain underpinned by concern about dry weather in Argentina possibly reducing soybean crop yields," Chong said. "This could potentially hold back Argentina's huge soymeal exports and so possibly shift export demand to other soymeal supply countries."
"I think soymeal is likely to continue to lead the soy complex as long as there is concern about Argentine soybean crop development."
Wheat is being weighed down by record global supplies but concern about crops in Australia is supportive.
"The disruptive La Nina weather pattern is developing in Australia which could have significant implications for the Australian wheat crop," Chong said. "It has been very rainy in parts of Australia during the harvest period which could raise quality issues with the harvest still unfinished."
The tropical Pacific Ocean has reached La Nina temperature levels, Australian weather officials said.
Australia's 2017/18 wheat production is expected to decline, agency ABARES said, after recent storms damaged crops weakened by severe drought earlier in the season.
Australia, the world's fourth-largest wheat exporter is forecast to produce 20.3 million tonnes of wheat this year, the agency said, down more than 6 percent from its September forecast of 21.64 million tonnes and 42 percent below last year's record crop of more than 35 million tonnes.
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