Soybeans, corn rise as drought hurts crops in Argentina

CHICAGO: US soybean futures on Wednesday rose for the sixth time in seven sessions while corn futures edged higher on expectations that a drought-reduced crop in Argentina would buoy demand for US supplies.

Gains were limited by plentiful global supplies and strong production prospects in Brazil.

Wheat, meanwhile, slipped to a two-week low, pressured by high world supplies and rain relief for parched crops in the US Plains.

Speculative investors have shifted to a more bullish view for corn and soybeans after weeks of hot, dry weather in Argentina, the world's No. 3 exporter of both commodities and top supplier of soymeal and soyoil.

"The trade is suggesting that the coming drop in Argentine production will almost all be shifted to US exports," said Rich Nelson, chief strategist with Allendale Inc.

Crop forecasters have been cutting their production forecasts for the country as corn and soy fields are expected to stay mostly dry next month.

Argentine farm consultancy Agripac cut its soybean crop forecast by about 18 percent from the start of the season and its corn crop estimate by 12 percent.

Brazil, however, is on track for a record crop. Several forecasters have ramped up their crop estimates in recent weeks amid favorable weather.

Chicago Board of Trade March soybeans were up 8 cents at $10.34-1/2 a bushel by 11:30 a.m. CST (1730 GMT), hovering near a seven-month high of $10.39 posted a day earlier. CBOT March corn gained a penny to $3.66-1/2 a bushel.

Grain markets are awaiting updated supply and demand forecasts from the US Department of Agriculture at its annual outlook forum later this week.

Analysts polled ahead of the gathering expect US soybean acres this season to exceed corn acres for just the second time ever.

Wheat futures weakened, led by hard red winter (HRW) wheat, as a storm moved across the Southern Plains crop belt, much of which is under severe to extreme drought.

March K.C. HRW wheat futures fell 5-1/2 cents to $4.66-1/4 a bushel. CBOT March soft red winter wheat was 1/4 cent lower at $4.49 a bushel after earlier sinking to a two-week low of $4.45-1/2

Ample global wheat supplies and stiff competition in export markets remained headwinds for US wheat. Major importer Egypt bought 120,000 tonnes of Russian wheat in its latest tender, underscoring the dominance of Black Sea origins on export markets.