Soy rally extends into 2021 on South America supply fears; corn ends mixed

CHICAGO: US soybean futures extended a rally to 6-1/2-year highs before trimming gains on Monday as dry crop weather and disruptions to exports in South America continued to unsettle investors at a time of brisk Chinese demand, analysts said.

Wheat closed modestly higher, while corn ended mixed, as both commodities pared gains after surging to six-year highs.

Chicago Board of Trade March soybeans settled up 2 cents at $13.13 per bushel after soaring to $13.49-1/2, the highest price on a continuous chart of the most-active soybean contract since June 2014.

Most-active CBOT corn ended down 1/4 cent at $4.83-3/4 a bushel after hitting $4.97-3/4, nearing the $5 mark for the first time since May 2014. CBOT March wheat settled up 1-1/2 cents at $6.42 a bushel.

Life-of-contract highs were set in nearly all CBOT soybean, corn and wheat futures months. Grains pared gains and turned lower at times as Wall Street equities sagged, investors booked profits and US farmers seized the moment to sell some of their last harvest and portions of the 2021 crop as well.

"It's been a long time since we've seen new-crop (prices) this high, especially on beans," said Dan Cekander, president of DC Analysis.

Yet uncertainty about soy and corn supplies in Argentina and Brazil lent support, sending futures sharply higher in early moves.

"New year, same old issues," Commerzbank said in a note.

"As 2021 begins, it is once again the same concerns about limited supply from South America and strong Chinese demand that are driving up soybean and corn prices."

Argentina's announcement last week of a suspension of corn exports until March, to ensure ample domestic food supply, deepened uncertainty about South American crops as dry weather continued to raise doubts over upcoming harvests.

The news came just after a near three-week strike by Argentine oilseed-crushing workers that disrupted supply from the world's largest exporter of soymeal livestock feed.

Grain markets have been sensitive to any risks over South American supply as strong Chinese import demand has already absorbed much available soy and corn on the world market.

Those factors helped corn, soybean and wheat futures notch double-digit percentage gains over 2020.