Bargain buying lifts corn and soya

Short-covering helped push US corn and soyabeans higher on Tuesday as bargain hunters responded to an early slide that saw corn fall to its lowest level in nearly a year. Ideas that South American crop weather concerns might trigger Chinese purchases of US soyabean supplies helped turn around soyabeans, while wheat prices also reversed course to end higher as investors saw value in an early price slide.
Gains overall remained limited, however, by the warning from Standard & Poor's that the rating agency might downgrade 15 eurozone nations, news that has dampened investors' appetite for risk assets like commodities. Nearby Chicago Board of Trade corn futures ended up 5 cents at $5.85-1/4, and March corn ended up 5-1/2 cents at $5.96-1/2. Funds bought an estimated net of 9,000 corn contracts, trade sources said. CBOT March wheat ended up 1-1/2 cents at $6.13. Funds bought an estimated 2,000 wheat contracts.
January soyabeans closed up 3-1/4 cents at $11.29-1/2. Funds bought an estimated 6,000 soyabean contracts. The turnaround for corn came after the front-month corn contract skidded to its lowest in nearly a year on a continuous chart. Traders said technical support helped give the grain a bounce as did forecasts for a drier weather pattern in South America.
Soyabeans and corn have recently been planted and are growing in the huge production areas of Brazil and Argentina. They will be harvested early in 2012. But talk of potential crop problems if dry conditions persist, which would trigger more demand for US supplies, was a supportive factor for corn and bean futures, said some analysts. "An underlying current of thinking is that the weather is turning foul in South America... and that could lead to increased demand for (the US crops)," said Tim Hannagan, analyst with PFG Best.
Still prices were kept in check by macro-economic concerns, most notably a warning from the S&P credit-rating agency that it might downgrade the euro zone nations if EU leaders fail to agree on how to solve the debt woes in a summit this week. Wheat prices, like corn and beans, opened lower, weighed down by news of increased wheat production in Canada, a record wheat crop in Australia, and more beneficial moisture moving across the US winter wheat belt, added to pressure on that market. A cold snap overnight hit the US Plains hard red winter wheat growing region, but it was not thought to have caused more than minor harm to the crop.